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Free CFA Derivatives Practice Questions & Answers

500 exam-style Derivatives questions. Pick your answer, hit Check answer, and see the worked solution — free to start, no signup.

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Question 301

Which of the following is NOT an assumption of the Black-Scholes-Merton model?

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Question 302

In the context of options, 'in-the-money' probability relates most closely to which Greek?

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Question 303

A bull call spread is created by:

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Question 304

A bear put spread involves:

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Question 305

A long strangle is a strategy that:

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Question 306

A calendar (time) spread involves:

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Question 307

An investor buys a put with K = $50 and sells a put with K = $40 (same expiration). This strategy is a:

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Question 308

Which option strategy has unlimited profit potential and limited maximum loss?

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Question 309

An investor who sells a cash-secured put wants the underlying to:

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Question 310

A risk reversal consists of:

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Question 311

The maximum loss on a short strangle is:

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Question 312

Selling a covered call is sometimes described as 'selling upside' because:

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Question 313

A put-call parity violation would allow an arbitrageur to earn a riskless profit by:

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Question 314

A stock repair strategy using options is typically employed when:

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Question 315

An investor writes a put at K = $100 and receives a premium of $5. The maximum loss is:

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Question 316

A diagonal spread combines:

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Question 317

Which strategy is most appropriate for an investor who is moderately bullish but wants to reduce the cost of buying calls?

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Question 318

The maximum gain on a bull call spread occurs when:

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Question 319

Why might an investor prefer an option strategy over a futures contract for hedging?

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Question 320

A long condor spread is best described as:

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Question 321

The Gamma of a short option position is:

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Question 322

A zero-cost collar eliminates:

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Question 323

A trader who is long gamma benefits from:

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Question 324

A corporation with floating-rate debt enters a receive-floating, pay-fixed interest rate swap to:

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Question 325

A pension fund with a long-term fixed liability stream can use interest rate derivatives to:

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Question 326

A portfolio manager uses equity index futures to quickly reduce beta from 1.2 to 0.8. The manager should:

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Question 327

Synthetic cash is created when a portfolio manager:

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Question 328

Currency futures are used by an exporter expecting to receive foreign currency in 3 months to:

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Question 329

Interest rate futures are commonly used by banks to:

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Question 330

A derivative overlay strategy in asset management means:

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Free CFA Derivatives Practice Questions & Answers

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