CFA 2026 Level I Derivatives Forward Contracts Free Quiz 2

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CFA 2026 Level I Derivatives Forward Contracts Free Quiz 2

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CFA 2026 Level I Derivatives Forward Contracts Free Quiz 2

Practice CFA 2026 Level I Derivatives MCQs from Forward Contracts. Get instant results with Explanation.

General5 MCQs

11. Is a forward contract an obligation or a right?

A. Gives the holder the right, but not the obligation, to buy or sell.B. Requires only one party to perform.C. Requires both parties to perform (obligation).D. Is always settled in cash.

12. How can a forward contract be settled?

A. Only physical delivery.B. Only cash settlement.C. No settlement is required.D. Physical delivery or cash settlement.

13. What is a forward contract on an interest rate called?

A. Forward rate agreement (FRA)B. Interest rate swapC. Futures contractD. Option contract

14. What is the payoff of a long FRA?

A. (Fixed rate - Reference rate) * Notional * (Days/360)B. (Reference rate - Fixed rate) * Notional * (Days/360)C. (Reference rate - Fixed rate) * NotionalD. 0

15. What is included in the cost of carry for a forward contract?

A. Storage costs only.B. Financing costs only.C. Storage costs, insurance, and financing costs.D. Insurance costs only.

General5 MCQs

16. What is the distribution of gains and losses in a forward contract?

A. Both parties gain.B. Both parties lose.C. No gain or loss for either party.D. One party gains and the other loses (zero-sum).

17. How can a forward contract be used for hedging?

A. Hedging price risk.B. Speculating on price movements.C. Arbitraging price differences.D. Discovering the fair price.

18. How can a forward contract be used for speculation?

A. Hedging.B. Speculation.C. Arbitrage.D. Price discovery.

19. How is the value of a forward contract before maturity calculated?

A. V = S0 - F0B. V = F0 - S0C. V = (F_t - F0) * e^(-r * (T - t))D. V = 0

20. How is the forward exchange rate determined?

A. Spot exchange rate only.B. Interest rate differential only.C. Inflation differential.D. Spot exchange rate and interest rate differential.

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Conducting Body: CFA Institute

Frequency: 4 times a year (February, May, August, November) | Time: 135 Minutes

Negative Marking: No

⚡ Test Pattern (Total: 90 MCQs):

Alternative Investments: 8 MCQs
Corporate Issuers: 7 MCQs
Derivatives: 5 MCQs
Economics: 7 MCQs
Equity Investments: 12 MCQs
Ethics: 16 MCQs
Financial Statement Analysis: 11 MCQs
Fixed Income: 11 MCQs
Portfolio Management: 9 MCQs
Quant Methods: 6 MCQs

Merit Formula: -

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