Derivatives

CFA Level I — Exam Weight: 5-7%

2

Modules

10

Concepts

10

Formulas

6

Quiz Questions

Modules in Derivatives

2 learning modules covering 5-7% of the CFA Level I exam.

1

Derivative Instruments and Markets

5 concepts 5 formulas 3 questions
2

Derivative Pricing and Valuation

5 concepts 5 formulas 3 questions

Key Formulas

7 essential formulas for Derivatives.

Forward Price

F₀ = S₀ × (1 + r)T

No-arbitrage forward (no income)

Forward Payoff (Long)

Payoff = S_T - F₀

Gain if spot > forward

Call Payoff

max(0, S_T - X)

Right to buy at strike X

Put Payoff

max(0, X - S_T)

Right to sell at strike X

Put-Call Parity

c + PV(X) = p + S

European options only

Risk-Neutral Probability

πᵤ = (1 + r - d) / (u - d)

Binomial model probability

Binomial Option Value

C = [πᵤCᵤ + (1-πᵤ)C_d] / (1+r)

Discounted expected payoff

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