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Basic Question 2 of 5
Derivatives offer the potential for trading efficiency in ______.
II. transactions costs
III. liquidity
I. cost of investing
II. transactions costs
III. liquidity
User Contributed Comments 5
| User | Comment |
|---|---|
| dnoyelles | how? |
| kutta2102 | I - trader doesn't have to put down 100% value of the asset II - if you view derivatives as insurance against an asset, the trading cost of any insurance should be less than that of underlying asset III - all derivatives have a finite life and an active market exists. |
| bidisha | good explanation, kutta2102. |
| johntan1979 | Yes, thank you |
| angusmyers | lol.. I read III. liquidity as "illiquidity".. I'm like - that can't possibly be right. |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
describe benefits and risks of derivative instruments
CFA® 2025 Level I Curriculum, Volume 5, Module 3.