- CFA Exams
- CFA Level I Exam
- Topic 7. Derivatives
- Learning Module 1. Derivative Instrument and Derivative Market Features
- Subject 1. Derivative Features and Underlyings
CFA Practice Question
A derivative is ______.
B. a liability derived from potential contingencies
C. a financial instrument deriving its value from another financial instrument
A. a corporate mandate to buy back outstanding shares of its own common stock
B. a liability derived from potential contingencies
C. a financial instrument deriving its value from another financial instrument
Correct Answer: C
User Contributed Comments 5
| User | Comment |
|---|---|
| mwewa | Thats the 'common sense' definition even my 2 year-old daughter can guess! |
| SuperM | clever daughter |
| BunnyBaby | yeah, it took me 4 years of college to get this right! lol |
| To-be-CFA | A: Treasury Stock B: Contingent Claims C: Derivatives |
| khalifa92 | just to clarify derivative do derive their values from another which is the most common definition and troublesome one because the same does ETF and mutual funds. however, in derivatives, the transfer of performance risk (and some costs not all) is completed before the transfer of payment. |