- 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 most accurately defined as a financial instrument that provides ______.
B. an adjustment to another asset's level of risk
C. an agreement between two parties to provide something for each other
A. a return based on the return of another asset
B. an adjustment to another asset's level of risk
C. an agreement between two parties to provide something for each other
Correct Answer: A
A return on a derivative is derived from another underlying asset.
User Contributed Comments 3
| User | Comment |
|---|---|
| mbowa | These answers appear to be dependent on the key words |
| ibrahim18 | Option C is interesting. ...to provide something for each othe |
| zhefuli | C sounds like marriage. |