Browse CFA Level III Study Guide

    Derivatives and Risk Management for CFA Level III

    Overlay, hedging, and risk-control logic for the Level III common core.

    Level III Derivatives and Risk Management is usually about portfolio control, not derivative trivia. The exam wants to know why an overlay, hedge, or risk-budget choice is appropriate for the investor or institution in the vignette.

    Current Chapter Focus

    • hedging logic tied to the investor’s real risk exposure
    • derivative overlays used to adjust allocation or control downside
    • risk-management decisions that protect objective fulfillment rather than just minimize variance
    • recommendation writing where the derivative use must be justified, not merely identified

    This chapter root is live so the official topic area is represented in the guide. Section lessons are planned for a later pass.

    3. Performance Measurement
    5. Ethics