Currently a finance major due to graduate soon. I had the opportunity to take a class using Jorion VaR (3rd edition) and really enjoyed the subject matter. I didn’t do amazing in the course (B+/A-), but I believe it is the area of finance I would like to get into. However, I have a question, what is the typical background of an FRM candidate. Generally speaking, is it more finance type majors (lets say one course of calculus and one stat) or more engineering or math type majors?
I ask this becuase the FRM carriculum seems to be pretty heavy in calculus concepts. Is there any point in the exam where you have to, for example, take the integral of some function on order to solve a problem, or is it more plug and chug? Do finance majors, lets say who have or are enrolled in the FRM but are without a heavy math background get hired into market risk positions?
Typical background? Just by reading a lot of the contributors in AF, it seems to me that the majority have some professional background in that they are already working in finance to some degree, and have some (some more than others, of course) experience. I’d say most are finance majors. Haven’t seen too many mathematicians or PhD engineers. A good percentage, albeit lower then the working professionals, are MBA grads/students getting certifications (CFA’s) to help them place well in the job market, upon leaving university.
I think that the understanding of calculus is needed from a conceptual basis; understanding why you’d be taking a derivative or integrating a function as opposed to actually doing it, is necessary. This would be good to understanding the derivation of the formulas that they are asking you to know, but mathematical manipulation of the formulas would be restricted to strong algebra and logarithms, mostly. So you’re not really applying Calculus (mostly), but you are needing a good understanding of higher Algebra and logs.
With regards to being hired, I’ve been looking at a lot of the jobs that come up when “Risk Management, Derivatives, Portfolio” is searched and found basically these combinations…1. PhD Mathematics, Statistics, no finance needed; just preferred. 2. 5-10 yrs. finance experience, MBA and CFA. 3. FRM and/or combinations of the other two. Ive also found that those positions that are really needing (based upon their “Job Specifications” FRM’s for, they are often time still asking for CFA’s. I mean they are wanting EXACTLY what the FRM course is teaching, and still asking for CFA’s with MBA’s. Goes to show that you are ahead of the curve when even their hiring dept. can’t quantify what they really need…but they will. LOL!
Anyway, I hope this helps. It is just my own experience and views. Many others have their own too, so take it all in. I, just for background, have about 18 years experience in trading and mid-sized portfolio management. Been a licensed (series 3, 7 and 66) and worked in that industry since leaving undergrad/finance in 92. Changing directions now, and the FRM looked perfect for me. Congrats on finishing school. You should have a bright future ahead with the FRM.