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IIA Exam IIA-CFSA Topic 6 Question 67 Discussion

Actual exam question for IIA's IIA-CFSA exam
Question #: 67
Topic #: 6
[All IIA-CFSA Questions]

A derivative with a convex payoff-profile at some point before the option's maturity is a simple plan vanilla option. As the option becomes progressively more-in-the money, the rate at which the position makes money increases until asympathetically approaches the linear payoff of the future. Similarly, as the option becomes progressively more out-of -- the money, the rate at which the position loses money decreases until that rate becomes zero. This is an example of:

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Suggested Answer: B

by Kanisha at Nov 13, 2024, 11:43 PM

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Bettye
2 months ago
Joke's on you, the answer is clearly B) Non linear derivative. I've got this option trading thing down to a science!
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Delbert
2 months ago
Easy peasy, B) Non linear derivative. Gotta love those asymptotic payoff profiles!
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Bobbie
23 days ago
I always find it intriguing how the rate at which the position loses money decreases as the option gets more out-of-the-money.
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Linn
24 days ago
Definitely, the asymptotic payoff profiles make non linear derivatives interesting.
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Tran
1 months ago
It's fascinating how the rate at which the position makes money increases as the option gets more in-the-money.
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Mable
1 months ago
I agree, B) Non linear derivative is the correct answer.
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Candra
2 months ago
I think it's C) Linear derivate because the payoff profile becomes linear as the option gets closer to maturity.
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Bong
2 months ago
I agree with Teresita, it makes sense that a convex payoff-profile would be a non linear derivative.
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Jillian
2 months ago
Ah, the old 'spot rate vs. linear derivative' conundrum. I'm going with B) Non linear derivative on this one.
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Ernie
2 months ago
Hmm, this seems like a trick question. The description matches the characteristics of an option, so I'm going with B) Non linear derivative.
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Johanna
24 days ago
I agree, it's all about the convex payoff profile.
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Alona
1 months ago
Yeah, it definitely fits the description of a non linear derivative.
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Nakita
2 months ago
I think you're right, it does sound like a non linear derivative.
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Teresita
2 months ago
B) Non linear derivate
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Rashad
2 months ago
This question is definitely testing our understanding of derivatives and their payoff profiles. I'd say the correct answer is B) Non linear derivative.
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Macy
23 days ago
Yes, those options don't match the description given.
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Fletcher
1 months ago
So, we can eliminate A) Spot rate and C) Linear derivative, right?
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Leota
1 months ago
I agree, the description definitely fits a non linear derivative.
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Desiree
1 months ago
I think you're right, it does sound like a non linear derivative.
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