CFA Practice Question

There are 206 practice questions for this study session.

CFA Practice Question

A derivative is ______.

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.
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