Level I · 2026 curriculum · 5–8% of the exam
Derivatives
Derivatives at Level I introduces forwards, futures, swaps and options: how they work, how they are priced by no-arbitrage, and how they pay off.
Exam weight5–8%
≈ Questions in a 180-question exam11
What the questions cover
- Forward commitments vs contingent claims, and exchange-traded vs OTC markets
- Uses, benefits and risks of derivatives
- Arbitrage, replication and the cost of carry
- Pricing and valuing forwards, futures and swaps
- Option payoffs and profits, and put–call parity
- The one-period binomial model
How to study it
- Separate payoff from profit: profit subtracts (or adds) the premium.
- Put–call parity questions are quick marks once the formula is second nature.
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