Wednesday, April 8, 2015

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!
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(fixed rate - floating rate) x (days/360) x notional
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
both spot and forward contracts
the fixed-rate payer owes/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
the receiver of a currency pays back the amounts (in arrears) in the currency borrowed
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.
1) reducing transactions costs 2) maintaining privacy 3) avoiding regulation
a series of forward contracts (FRAs) that expire on the settlement dates
trading of one set of floating rates for another
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Free Online CFA Level 1 Practice Questions-34 Multiple Choice Questions on Derivatives

There are no easy-outs in the CFA certification exam and Derivatives topic has also no exception. You need to have some effective strategies which get you through the exam and Free Online CFA Level 1 Practice Questions-34 Multiple Choice Questions on Derivatives is something special we would love to recommend for you. Through many multiple choice questions with instant answers, test-takers are given a thorough coverage of this topic with broader understanding of derivatives issues. Make your effort to these CFA level 1 practice questions free daily to round out your study method, improve your weaknesses and revise what you’ve learnt. Hope it work well on you!
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similar to FRAs as there is no deliverable asset - settled in cash, based on a notional amount and the spread between the strike rate and the reference rate, mostly European optionscombination of long interest rate call option and a short interest rate option has the same payoff as Forward Rate Agreement
buying a stock and put option
Forward contract to borrow/lend money at a certain rate at some future time; settle in cash and no actual loan takes placecan be replicated with a long call and short putsettlement date: shorter one
the process of adjusting the margin balance in a futures account each day for the change in the value of the contract assets from the previous trading day
notional principal ( (underlying rate at expiration - forward contract rate) (days in underlying rate/360) / (1+underlying rate at expiration (days in underlying rate/360)).
equivalent to (from the a borrower's perspective) series of short interest rate puts , put a minimum on the payments of a floating-rate loan and are equivalent ot a series of short interest rate puts at the floor rate
1- ((rate/100)(90/360) 1,000,000))
A claim depending on a particular event e.g. options gets exercised if price is below or above strike price
know what they are
call + strike price / (1+rfr)^t (=fiduciary call) = stock + put (=protective put)
-refers to the seller's option to deliver the cheapest instrument when a futures contract allows several instruments for delivery
closing price of a stock but not price of last trade; used to make margin calculations at the end of each trading day
= (swap fixed rate - LIBOR) (number of days/360) (notional principal)
conversion factor is used to multiply by the future price to determine the delivery price
for futures: maintain at least the initial marginfor equities: put money back in to equal maintenance margin
offers payments to the purchaser of the cap when a specified interest rate exceeds a specified ceiling (cap) interest rateequivalent to (from a borrower's perspective) series of long interest rate calls at the cap rate
amount which multiplied by the index at expiration to calculate the payoff - index options are settled in cash
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Free Online CFA Level 1 Practice Questions-11 Multiple Choice Questions on Derivatives

Free Online CFA Level 1 Practice Questions-11 Multiple Choice Questions on Derivatives excels in depth of basic content on the derivatives topic, leading you to pass CFA examination. The highlight of this updated free CFA practice questions and answers is concise and easy-to-understand questions mimicking the multiple choice format of the actual exam are given clear answers with just one click to the submit button at the bottom of this test. As such, you can refresh your practice time without any fear thanks to unlimited time of testing. After that, the test will let you know where you are standing in your study and top up your understanding of this subject as much as possible. Hurry to try it now and tell us how quickly you can improve your performance. Hope you love it!
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have a multiplier that is multiplied by the index to calculate the contract value, and settle in cash.
An offsetting trade, entering into an opposite position in the same contract.Cash payment at expiration (cash-settlement contract).Delivery of the asset specified in the contract.An exchange for physicals (asset delivery off the exchange).
for a face value of $100,000, give the short a choice of bonds to deliver, and use conversion factors to adjust the contract price for the bond that is delivered.
When margin falls below this amount, it must be brought back up to its initial level by depositing additional cash.
option's owner the right, but not the obligation, to buy a specified quantity of the asset from the option writer at the exercise price specified in the option for a given time period.
for a face value of $1,000,000, are quoted as 100 minus annualized 90-day LIBOR in percent, and settle in cash.
based on the daily settlement price, the average of the prices for trades during a closing period set by the exchange
deposit required to initiate a futures position
for delivery of standardized amounts of foreign currency
minimum margin amount.
--the process of adding gains to or subtracting losses from the margin account daily, based on the change in settlement prices from one day to the next. --day's gains in contract value + long's margin balance and subtracts them from the short's margin balance, or subtracts the day's loss in contract value from the long's margin balance + short's margin balance.
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Free CFA Level 1 Practice Exam-29 Multiple Choice Questions on Derivatives

Available for free online studying, Free CFA Level 1 Practice Exam-29 Multiple Choice Questions on Derivatives among our free CFA practice exams is definitely right on point because of accessibility and thorough coverage through over many concepts which is very essential for your CFA certification exam. Following multiple choice questions have indicated basic content on derivatives and refined your knowledge and skills in a short, as a result, fulfill your preparation before the exam. Smart choice if you are ready to join our members and try out these useful CFA sample exam questions. Hope it help you to get higher performance in the next challenge. Remember to share the score to compare with other people in the comment box!
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long 5% call and short 5% put
Treasury contracts are deliverable. Short party has to deliver the treasury bond to the long party
margin is really a security deposit parties need to deposit when buy futures
S+P = C + X /(1+rfr)^tprotective put equals fiduciary callprotective put = buy stock and buy put to protect downside (S+P)fiduciary call = buy call and also also discount bond that pays X
its based on a $1m face.based on 90 days billquoted on discount annual basis (so 98 quote means 2% discount)actual discount is 2%*90/360 = 0.5%
max (0, Strike-Libor) * nominal amount(have to adjust for period if not full year libor)
C. multiplied by the futures price to determine the delivery price.
intrinsic value is either 0 or stock - x (which ever is higher). so if out of the money then 0, if in the money then S-x (or x - s for puts). the other part of option value is called time value.
Nothing. no payment is needed. payment/settlement is made at the end of the forward
you hope that it appreciates. cause you lock in price, so if it appreciates you buy it below new price
if rates went up then the is a gain.amount of the gain is new rate minus contract rate time number of days /365, since the gain is not for the whole year. and then need to PV this gain, so divide by 1 +market rate*days/360
they are in different currencies: Libor denominated in USD and Euribor in EUR
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Tuesday, April 7, 2015

20 CFA Level 3 Practice Exams Free Questions and Answers on Fixed Income

20 CFA Level 3 Practice Exams Free Questions and Answers on Fixed Income has an emphasis on a basic understanding of key concepts which is obviously important in this topic and polish up your critical thinking skill. By testing on a set of CFA practice questions free with fast responsive answers, key concepts and their application into real situations will be showcased clearly and comfortable for test-takers’ retention. You will be surprised at how quickly you are able to understand complex concepts and how trouble-freely you can tackle with all the difficult questions in the exam. Let’s work out all the following questions and explore how you can score well in the test. Highly appreciate if you can leave your ideas in the box below!
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the underlying security in the futures contract is not identical to the asset being hedged
measures the effect of changes in only one variable - the others are held constant
change in price = -duration x breakeven yield change
spot (cash) price - futures price at delivery
concentrating the maturities of the bonds around the liability date
1. default risk2. credit spread risk3. downgrade risk
- price risk and reinvestment risk exactly offset each other- standard condition is risk minimization
- First level of indexing designed to earn about the same return as the index- Maintain exposure to large risk factors (duration) and pursue relative value strategies
1. pure bond indexing2. enhanced indexing by matching primary risk factors3. enhanced indexing by small risk factor mismatches4. active management by larger risk factor mismatches5. full-blown active management
1. Select a bond with an effective duration equal to the duration of the liability2. Set the PV of the bond equal to the PV of the portfolio
1. market value risk - varies directly with maturity2. income risk - the more dependent on income, the longer the maturity profile3. credit risk - credit risk of benchmark/portfolio should be similar4. liability framework risk - mismatches in the firm's asset/liability structure
the standard deviation of alpha across several periods
the first bond matures several years before the liability date and the other several years after the liability date
measures the portfolio's sensitivity to twists in the yield curve
- a collateralized loan, where the difference between the sale and repurchase prices is the interest on the loan- the lender in a repurchase agreement is exposed to credit risk, if the collateral remains in the borrower's custody
- Measure of the relative extent to which the terminal value of an immunized portfolio falls short of its target value as a result of nonparallel changes in interest rates- Portfolios that have the lowest levels of reinvestment risk will do the best job of immunization
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28 CFA Sample Exam Questions Free with Instant Answers on Fixed Income

Many candidates who have taken part in some professional courses or programs are left confused about what they are learning inside. The exam day is coming so close while you have not enough time to cover all the knowledge in the curriculum. Don’t be afraid! 28 CFA Sample Exam Questions Free with Instant Answers on Fixed Income may help you that. It’s appropriate for CFA candidates who have no background of this topic. Free CFA practice exams questions in the user-friendly format always keep it easy to practise and reinforce your knowledge day by day. Wish for that your anxiety about it is blown away and an effective plan to pursue your knowledge will be set up after working out test. Let’s get started right now!
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This is the price of security plus accrued interest
The amount of money the issuer agrees to pay each year
Principal amount, face amount the issuer agrees to repay the bondholder at maturity.
Terms of bond issue, total amount issued, description of security, repayment, call, affirmative/negative covenants
Set forth what the borrower has promised to do. i.e. Timely pymts of interest/principal, pay all taxes due, maintain property.
Coupon Rate, Par value, and Maturity
Bonds that have a coupon rate that increases with time. Spelled out in bond indenture
Interest rate the issuer agrees to pay each year
Formula to determine the call premium to be offered to assure the bondholder a minimum yield.
The coupon rate changes based on a preset formula usually based on a public rate (LIBOR, Treasury) Can be positive and negative and usually have a ceiling (protect issuer, cap risk for holder) and a floor (risk to issuer)
Debt obligations (asset backed, mortgage backed, bonds, bank loans) or Preferred Stock (ownership interest which pays a fixed dividend from profits)
Asset/mortgage backed bonds where interest/principal are paid monthly
5s of 6/30/25 = 5%, maturing at that date. Most pay semi, mortgage backed pay principal and interest monthly.
The period of time remaining until all payments have been made. 1-5 ST, 5-12 Inter, 12+ LT
Opposite of referenced rate. Formula: 10% fixed, 2x the reference rate (4) 10-8 = 2% coupon rate
When the bond is paid in full, the yield depends on the term(yield curve), the volatility is a function of it's maturity.
Set forth limitations and restrictions: limits the borrowers ability to incur more debt, obligations to meet certain ratios, notify trustee prior to asset sales
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69 CFA Sample Exam Questions Free with Instant Answers on Fixed Income

Following are 69 CFA Sample Exam Questions Free with Instant Answers on Fixed Income-a powerful tool for your study plan. Those CFA exam questionnaire is packed with invaluable and useful information to anyone who are desiring to pass all three levels of CFA exams. They focus on helping test-takers to touch all the corner of content on fixed income and stay tuned with the most updated knowledge for the next exam. Besides, they are geared towards the improvement of logical thinking by giving practical examples into each question. As such, ensure to provide you with an amazing testing experience and big chance of getting CFA certification in the future. Go over CFA sample exam questions free to gain exam results beyond your expectation and shout out end-of-test points to each other in the comment box below!
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(chapter 7) all assets are distributed to holders of securities & firm ends
83.3%150000/180000
subsidiaries of banks to secure finances of purchases
insurance against the default of a reference entity
particular debt issue for which credit protection is sought
96+14/32 +1/64
only comes into effect when the company wants to do more borrowing
call upon the corporation to make promises to do certain things
homeowner//borrower will default
the mortgage originator
bonds that adjust for the inflation rate
determined by degree of liquidity
a covenant is a set of rules placed on the issuer designed to stabilize performance and reduce the likelihood of default
Bills - short term debt (4,13,and 26 weeks)notes - medium term debt (less than 10 years)bonds - greater than 10 years
bond paid off at maturity
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