# 2022 Curriculum

## Reading 46: Basics of Derivative Pricing and Valuation

-LOS 46a: explain how the concepts of arbitrage, replication, and risk neutrality are used in pricing derivatives;

-LOS 46b: explain the difference between value and price of forward and futures contracts;

-LOS 46c: calculate a forward price of an asset with zero, positive, or negative net cost of carry;

-LOS 46d: explain how the value and price of a forward contract are determined at expiration, during the life of the contract, and at initiation;

-LOS 46e: describe monetary and nonmonetary benefits and costs associated with holding the underlying asset and explain how they affect the value and price of a forward contract;

-LOS 46f: define a forward rate agreement and describe its uses;

-LOS 46g: explain why forward and futures prices differ;

-LOS 46h: explain how swap contracts are similar to but different from a series of forward contracts;

-LOS 46i: explain the difference between value and price of swaps;

-LOS 46j: explain the exercise value, time value, and moneyness of an option;

-LOS 46k: identify the factors that determine the value of an option and explain how each factor affects the value of an option;

-LOS 46l: explain put–call parity for European options;

-LOS 46m: explain put–call–forward parity for European options;

-LOS 46n: explain how the value of an option is determined using a one-period binomial model;

-LOS 46o: explain under which circumstances the values of European and American options differ.

# 2023/24 Curriculum

### (Reading 55) Module 8: Pricing and Valuation of Options

LOS a: Explain the exercise value, moneyness, and time value of an option

### (Reading 57) Module 10: Valuing a Derivative Using a One-Period Binomial Model

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