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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 151

Bootstrapping discount factors from coupon bond prices is best described as:

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Question 152

A self‑financing portfolio is one in which:

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Question 153

A currency swap typically involves:

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Question 154

In valuing a currency swap, the standard approach is to:

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Question 155

A forward rate agreement (FRA) is most similar to:

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Question 156

The value of an existing FRA is found by:

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Question 157

In a pay‑fixed interest rate swap, the position is equivalent to:

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Question 158

The value of a receive‑fixed swap at time (t) (after initiation) is:

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Question 159

When valuing a swap between payment dates, the floating leg value must:

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Question 160

A swaption can be interpreted as:

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Question 161

A cap can be replicated as:

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Question 162

A floor can be replicated as:

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Question 163

Cap value from two caplets Two caplets have PVs of 30,000 and 45,000. What is the cap value?

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Question 164

Floor value from three floorlets Floorlet PVs: 20,000; 15,000; 10,000. Floor value?

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Question 165

Multi‑period cap valuation Caplet PVs: 40,000; 35,000; 30,000; 25,000. Cap value?

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Question 166

Multi‑period floor valuation Floorlet PVs: 10,000; 15,000; 20,000; 25,000.

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Question 167

Swaption annuity factor calculation Payments annually for 4 years. Discount factors: 0.95, 0.91, 0.87, 0.84. What is the annuity factor?

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Question 168

What is the PV of the year‑2 caplet?

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Question 169

Which swaption protects against rising rates?

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Question 170

A total return swap allows one party to:

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Question 171

A credit default swap (CDS) can be used by a bank to:

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Question 172

An investor uses a total return swap to gain exposure to a high-yield bond index without buying the bonds. The investor is:

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Question 173

A credit default swap (CDS) spread represents:

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Question 174

In a CDS, a credit event typically includes:

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Question 175

A protection buyer in a CDS benefits when:

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Question 176

Physical settlement of a CDS means:

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Question 177

Cash settlement of a CDS is based on:

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Question 178

The credit triangle relationship is: CDS spread ≈ default probability × (1 − recovery rate). If the annual default probability is 2% and recovery is 40%, the CDS spread is approximately:

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Question 179

'Wrong-way risk' in a CDS refers to:

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Question 180

The ISDA Master Agreement in the context of CDS is important because it:

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Free CFA Derivatives Practice Questions & Answers

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