CFA1 - Der - Module 1

Which of the following is NOT a basic feature of a derivative instrument?

• Contract type

• Underlying asset

• Investor’s salary

• Contract size

In which market are customized contracts typically traded?

• Exchange-traded

• OTC (Over-the-Counter)

• Auction market

• Spot market

Which of the following derivatives is a contingent claim?

• Forward contract

• Futures contract

• Swap

• Option

What does a forward commitment provide?

• The right but not obligation to buy/sell

• The obligation but not the right to buy/sell

• Only the obligation to pay a premium

• None of the above

A derivative derives its value from an ___________ asset.

In an interest rate swap, one party pays a fixed rate while the other pays a ___________ rate.

In a forward contract, the price is agreed at t = 0, and the contract is settled at t = _______.