Free CFA Level 1 Practice Exam-22 Multiple Choice Questions on Derivatives

With Free CFA Level 1 Practice Exam-22 Multiple Choice Questions on Derivatives, it’s believed that you can pass the topic area with flying colors. Many candidates neglect the Derivatives portion of the exam until they get to the exam and find out that how complicated a seem-to-be-easy topic is. Work out problem questions at the end of chapter as well as practice questions at our page to get your better understanding of this topic. Do not despair with a six-hour exam, CFA level 1 practice exams online for free will support you mentally for the exam and be willing to defeat other peers. Let us know if you have any comment on this test! Best luck!
To view full questions and answers, please kindly visit our site:  http://cfaexampreparation.com/978/free-cfa-level-1-practice-exam-22-multiple-choice-questions-on-derivatives/

(fixed rate - floating rate) x (days/360) x notional

• What are the four ways to terminate a swap?
• What is the general formula for interest rate swaps?
• What are the four types of currency swaps?
• What is an interest rate swap?

1) mutual termination : cash payment made to one party2) offsetting contract : must worry about default/counterparty risk3) resale : sell swap to another counterparty (least likely way to terminate)4) exercise a swapation : option to enter into a swap

• What are 7 characteristics of swaps?
• What is an interest rate swap?
• What are the four ways to terminate a swap?
• What are the four types of currency swaps?

both spot and forward contracts

• Currency swap markets consist of transactions in
• What are 7 characteristics of swaps?
• What can a swap be broken down in to?
• What is a basis swap?

the fixed-rate payer owes/pays

• What is an equity swap?
• If the net-fixed payment is positive ...
• If the net-fixed payment is negative ...
• If index return is positive, who pays?

exchange of one loan for another. notional amounts do not change hands at inception or at termination. only loan payments are made. fixed-for-floating is the normal interest rate swap, AKA plain vanilla swap

• What is an interest rate swap?
• What is a currency swap?
• What is a basis swap?
• What is an equity swap?

the receiver of a currency pays back the amounts (in arrears) in the currency borrowed

• What are the motivations for entering into a currency swap?
• When calculating fixed and floating payers in currency swaps, what do you need to be mindful of?
• What is the floating rate in an interest rate swap, usually based on?
• What are the four types of currency swaps?

a swap where a set of future cash flows are agreed to be exchanged between two counterparties at set date in the future. The two cash flows are usually referred to as "legs" of the swap; one of these "legs" is usually pegged to a floating rate such as LIBOR. The other leg of the swap is based on the performance of either a share of stock or a stock market index. Most equity swaps involve a floating leg vs. an equity leg, although some exist with two equity legs.

• What is an interest rate swap?
• What is a basis swap?
• What is an equity swap?
• What is a currency swap?

1) reducing transactions costs 2) maintaining privacy 3) avoiding regulation

• What are the motivations for entering into a currency swap?
• What are the four types of currency swaps?
• What are some reasons to enter into an equity swap?
• What are the four ways to terminate a swap?

a series of forward contracts (FRAs) that expire on the settlement dates

• What is a currency swap?
• What is a basis swap?
• What can a swap be broken down in to?
• What is "tenor"?

trading of one set of floating rates for another

• What is a basis swap?
• What is a currency swap?
• What are swaps?
• What is an equity swap?