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SOFE SOFA-CFE Exam - Topic 3 Question 109 Discussion

An agreement to receive payments as the buyer of an option, cap, or floor and to make payments as the seller of a different option, cap, or floor is called:
A) Derivative
B) Miscellaneous
C) Obligatory
D) Collar

SOFE SOFA-CFE Exam - Topic 3 Question 109 Discussion

Actual exam question for SOFE's SOFA-CFE exam
Question #: 109
Topic #: 3
[All SOFA-CFE Questions]

An agreement to receive payments as the buyer of an option, cap, or floor and to make payments as the seller of a different option, cap, or floor is called:

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Suggested Answer: A

by Denny at Mar 22, 2025, 03:24 PM

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Lindsey
7 months ago
Wait, is a collar really a thing? Sounds weird.
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Adrianna
7 months ago
Definitely a derivative, right?
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Willard
7 months ago
I thought it was just a type of option.
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Yuriko
7 months ago
Yup, collars are used to hedge risk!
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Adela
8 months ago
It's called a Collar!
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Cyndy
8 months ago
I vaguely recall that a collar is used to limit risk in options trading, so I’m leaning towards D, but I need to double-check my notes.
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Desmond
8 months ago
I feel like "derivative" is a broader term that could apply here, but I'm not confident if that's the best answer for this question.
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Angelo
8 months ago
I remember practicing a question about options and collars, and I think a collar involves both buying and selling options, so it could be D.
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Cecilia
9 months ago
I think this might be related to derivatives, but I'm not entirely sure if "collar" is the right term for this specific agreement.
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Ula
9 months ago
I'm a bit confused by the wording of this question. "Obligatory" doesn't seem to fit the description, and "Miscellaneous" is too vague. I'm leaning towards either A or D, but I'll have to re-read the question a few times to be sure.
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Melinda
9 months ago
Okay, let me break this down. A collar is when you buy a put option and sell a call option, or vice versa, to limit your downside risk. So I think the correct answer here is D, Collar.
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Gary
9 months ago
Hmm, I'm not totally sure about this one. The options, caps, and floors mentioned in the question are all types of derivatives, so I'm wondering if the answer could be "Derivative" as well. I'll have to think this through carefully.
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Kasandra
9 months ago
I'm pretty confident this is a collar. The question describes an agreement to receive payments as the buyer of one derivative and make payments as the seller of another, which sounds like a collar.
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Fernanda
1 year ago
Hmm, a Collar, huh? Sounds like something you'd wear to a fancy dog party. But hey, at least it's not a Leash or a Choke Chain, right?
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Corazon
1 year ago
B) Miscellaneous? What kind of answer choice is that? Might as well just throw a dart and hope for the best. I'm sticking with D) Collar.
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Frederick
1 year ago
I'm not sure, but I'll go with A) Derivative.
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Alyce
1 year ago
I agree with you, I'll choose D) Collar.
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Joseph
1 year ago
I'm going with C) Obligatory.
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Tony
1 year ago
I think it's A) Derivative.
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Harris
1 year ago
C) Obligatory? Really? That's not even a real finance term! I'm going with D) Collar, definitely the most logical choice here.
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Dierdre
1 year ago
I agree, Collar makes the most sense in this context.
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Hillary
1 year ago
Collar is the correct term for this agreement.
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Virgilio
1 year ago
D) Collar
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Melda
1 year ago
C) Obligatory
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Veronika
1 year ago
Yeah, I agree with you. D) Collar seems like the most logical choice here.
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Mari
1 year ago
B) Miscellaneous
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Tina
1 year ago
I'm going with D) Collar, it just sounds like the right answer.
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Timothy
1 year ago
A) Derivative
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Dolores
1 year ago
I think it's A) Derivative, that makes the most sense to me.
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Kimbery
1 year ago
I was leaning towards A) Derivative, but after reading the options again, D) Collar makes more sense. Gotta pay attention to the details!
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Zachary
1 year ago
Oh, really? I'll have to reconsider my choice then.
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Chana
1 year ago
Actually, I believe D) Collar is the correct answer.
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Ayesha
1 year ago
I agree, A) Derivative sounds right to me too.
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Milly
1 year ago
I think A) Derivative is the correct answer.
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Phuong
1 year ago
D) Collar seems like the correct answer here. It's an agreement where you receive payments as the buyer of one option and make payments as the seller of another.
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Kenneth
1 year ago
D) Collar seems like the correct answer here. It's an agreement where you receive payments as the buyer of one option and make payments as the seller of another.
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Justa
1 year ago
A) Derivative
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Ailene
1 year ago
I agree with Luis, A) Derivative makes sense in this context.
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Luis
1 year ago
I think it's A) Derivative because it involves receiving and making payments based on options.
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Bev
1 year ago
A) Derivative
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