- CFA Exams
- CFA Level I Exam
- Topic 7. Derivatives
- Learning Module 50. Derivative Benefits, Risks, and Issuer and Investor Uses
- Subject 1. Derivative Benefits and Risks
CFA Practice Question
Derivatives offer the potential for trading efficiency in ______.
II. transactions costs
III. liquidity
I. cost of investing
II. transactions costs
III. liquidity
Correct Answer: I, II and III
User Contributed Comments 5
| User | Comment |
|---|---|
| dnoyelles | how? |
| kutta2102 | I - trader doesn't have to put down 100% value of the asset II - if you view derivatives as insurance against an asset, the trading cost of any insurance should be less than that of underlying asset III - all derivatives have a finite life and an active market exists. |
| bidisha | good explanation, kutta2102. |
| johntan1979 | Yes, thank you |
| angusmyers | lol.. I read III. liquidity as "illiquidity".. I'm like - that can't possibly be right. |