Topic 8 of 10 • CFA Level 1

Derivatives

Forwards, futures, options, and swaps

10
Subtopics
22
Learning Outcomes
5-8%
Exam Weight

Topic Overview

Derivatives is one of the 10 major topic areas in the CFA Level 1 curriculum, representing approximately 5-8% of the exam. This topic area covers 10 key subtopics that form the foundation of derivatives knowledge required for investment professionals.

Understanding derivatives is essential for CFA candidates as it provides the fundamental concepts needed to analyze financial markets and make informed investment decisions. This topic area includes 22 specific learning outcomes that candidates must master for the exam.

Subtopics in Derivatives

1

Derivative Instrument and Derivative Market Features

2 learning outcomes

2

Forward Commitment and Contingent Claim Features and Instruments

3 learning outcomes

3

Derivative Benefits, Risks, and Issuer and Investor Uses

2 learning outcomes

4

Arbitrage, Replication, and the Cost of Carry in Pricing Derivatives

2 learning outcomes

5

Pricing and Valuation of Forward Contracts and for an Underlying with Varying Maturities

2 learning outcomes

6

Pricing and Valuation of Futures Contracts

2 learning outcomes

7

Pricing and Valuation of Interest Rates and Other Swaps

2 learning outcomes

8

Pricing and Valuation of Options

3 learning outcomes

9

Option Replication Using Put–Call Parity

2 learning outcomes

10

Valuing a Derivative Using a One-Period Binomial Model

2 learning outcomes

Study Tips for Derivatives

Recommended Approach

  • • Start with understanding key concepts before memorizing formulas
  • • Practice calculations with real-world examples
  • • Review learning outcomes to ensure complete coverage
  • • Take topic-specific practice quizzes regularly

Key Focus Areas

  • • Understand how this topic connects to other CFA areas
  • • Focus on high-weight subtopics for maximum impact
  • • Review past exam questions for this topic
  • • Create summary notes for quick revision

Ready to Master Derivatives?

Practice with our comprehensive question bank featuring questions on all 10 subtopics and 22 learning outcomes.

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Other CFA Level 1 Topics

Ethical and Professional Standards
15-20%
Quantitative Methods
6-9%
Economics
6-9%
Financial Statement Analysis
11-14%
Corporate Issuers
6-9%
Equity Investments
11-14%
Fixed Income
11-14%
Alternative Investments
7-10%
Portfolio Management
8-12%