Chapter 8: Derivatives

In this section

• Derivative Instrument and Derivative Market Features
  Derivative Instrument and Derivative Market Features: Explains Definition of a Derivative and Key Features of Derivative Instruments with clear explanations, key formulas, and worked examples, plus practice questions with explanations for CFA Level 1.
• Forward Commitment and Contingent Claim Features and Instruments
  Forward Commitment and Contingent Claim Features and Instruments: Explains Forward Commitments and Forward Contracts with clear explanations, key formulas, and worked examples, plus practice questions with explanations for CFA Level 1.
• Derivative Benefits, Risks, and Issuer and Investor Uses
  Derivative Benefits, Risks, and Issuer and Investor Uses: Explains The Big Benefits of Derivatives and Hedging with clear explanations, key formulas, and worked examples, plus practice questions with explanations for CFA Level 1.
• Arbitrage, Replication, and the Cost of Carry in Pricing Derivatives
  Arbitrage, Replication, and the Cost of Carry in Pricing Derivatives: Explains Arbitrage and the Law of One Price and The Law of One Price in Action with clear explanations, key formulas, and worked examples, plus practice questions with explanations for CFA Level 1.
• Pricing and Valuation of Forward Contracts and Underlying with Varying Maturities
  Pricing and Valuation of Forward Contracts and Underlying with Varying Maturities: Explains Master the Details of Forward Contract Pricing and Valuation: Quiz and A forward rate agreement (FRA) is primarily used to: with clear explanations, key formulas, and worked examples, plus practice questions with explanations for CFA Level 1.
• Pricing and Valuation of Futures Contracts
  Pricing and Valuation of Futures Contracts: Explains Futures versus Forwards and Marking to Market (MTM) with clear explanations, key formulas, and worked examples, plus practice questions with explanations for CFA Level 1.
• Pricing and Valuation of Interest Rates and Other Swaps
  Pricing and Valuation of Interest Rates and Other Swaps: Explains Swaps as a Series of Forward Contracts and Similarities to Forward Commitments with clear explanations, key formulas, and worked examples, plus practice questions with explanations for CFA Level 1.
• Pricing and Valuation of Options
  Pricing and Valuation of Options: Explains Understanding Moneyness and Intrinsic Value and Time Value with clear explanations, key formulas, and worked examples, plus practice questions with explanations for CFA Level 1.
• Option Replication Using Put–Call Parity
  Option Replication Using Put–Call Parity: Explains The Roots of Put–Call Parity and Intuitive No-Arbitrage Logic with clear explanations, key formulas, and worked examples, plus practice questions with explanations for CFA Level 1.
• Valuing a Derivative Using a One-Period Binomial Model
  Valuing a Derivative Using a One-Period Binomial Model: Explains Key Concepts and Up and Down Factors (u and d) with clear explanations, key formulas, and worked examples, plus practice questions with explanations for CFA Level 1.