CFA 2026 Level I Derivatives Option Contracts Free Quiz 1

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CFA 2026 Level I Derivatives Option Contracts Free Quiz 1

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CFA 2026 Level I Derivatives Option Contracts Free Quiz 1

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

General5 MCQs

1. What is an option contract?

A. A contract that gives the right, but not the obligation, to buy or sell.B. An obligation to buy or sell an asset at a future date.C. A standardized exchange-traded contract with daily settlement.D. An agreement to exchange cash flows over a period.

2. What is the difference between a call option and a put option?

A. Call options are rights to sell; put options are rights to buy.B. Call options are rights to buy; put options are rights to sell.C. Both calls and puts are rights to buy.D. Both calls and puts are rights to sell.

3. What is the difference between a European and an American option?

A. European options can be exercised at any time; American options only at expiration.B. Both can be exercised at any time.C. European options only at expiration; American options at any time.D. Both can only be exercised at expiration.

4. What are the three states of moneyness for an option?

A. In-the-moneyB. Out-of-the-moneyC. At-the-moneyD. In-the-money, at-the-money, and out-of-the-money

5. What is the intrinsic value of a call option?

A. max(0, S - X)B. max(0, X - S)C. S - XD. X - S

General5 MCQs

6. What is the intrinsic value of a put option?

A. max(0, S - X)B. max(0, X - S)C. X - SD. S - X

7. What is the price paid for an option called?

A. Intrinsic valueB. Time valueC. Strike priceD. Premium

8. What is the price at which the option holder can buy or sell the underlying asset?

A. Strike price (exercise price).B. Premium.C. Underlying price.D. Expiration date.

9. What are the positions of the option buyer and seller?

A. The buyer is short; the seller is long.B. The buyer is long; the seller is short.C. Both are long.D. Both are short.

10. What is the risk profile of an option buyer and seller?

A. Buyer's loss is unlimited; seller's loss is limited.B. Buyer's loss is limited; seller's loss is unlimited.C. Buyer's loss is limited to the premium; seller's loss can be unlimited.D. Both have unlimited losses.

📋 CFA - Test Online Practice Quizzes

CFA

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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