CFA Level 1 Prep: 8 - Derivatives 1 CPE

Derivatives feature prominently on the CFA exam and that is the focus of this course. We will cover derivatives with a primary focus on options, but also including forwards and futures. Derivatives are harder to price than other investments, so in addition to talking about the characteristics of call options and put options, we will also go over how they are priced including the Black Scholes formula and the inputs to it.

Prerequisites

No advanced preparation or prerequisites are required for this course. 

Learning Objective

• Discover a derivative and distinguish between exchange-traded and over-the-counter derivatives.
• Explore how the concepts of arbitrage, replication, and risk neutrality are used in pricing derivatives.
• Identify the factors that determine the value of an option and explain how each factor affects the value of an option.
• Explore how the value and price of a forward contract are determined at expiration, during the life of the contract, and at initiation.
• Identify high level strategies for dealing with derivatives questions on the CFA.

Last updated/reviewed: March 11, 2024