Derivatives

Option Valuation Concepts practice questions

Option Valuation Concepts is part of CFA Level I Derivatives. Derivatives questions cover forwards, futures, swaps, options, replication logic, payoffs, and risk-transfer mechanics. Use this page to review the controlling ideas, then work through 2 questions with answer explanations and common traps.

Review the worked explanations before moving into adaptive practice. The app version can mix this topic with due reviews and weak related concepts.

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What to know

Identify the rule, formula, or decision criterion before reading the answer choices. CFA Level I distractors often use the right vocabulary with the wrong condition.

How to practice

Work each item under time pressure, then compare your reasoning with the step-by-step explanation and key takeaway.

Review signal

Missed questions should become scheduled reviews when the error comes from a concept gap, formula setup, or answer-choice trap.

Moderate

Derivatives

Option Valuation Concepts

A European call with exercise price 100 trades for 8 when the underlying is 104. The option's exercise value and time value are, respectively:

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Moderate

Derivatives

Option Valuation Concepts

Holding other inputs constant, which change most likely increases the value of both a European call and a European put on a non-dividend-paying stock?

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