Quiz: How Much Do You Know about Forex
Q1 What are Forex instruments?
A: Instruments for determining the exchange rates.
B: Instruments for nominating limit order
C: Instruments for determining the currencies required for Forex trading
D: Instruments for trading in foreign exchange
Correct answer- D
Q2 Is Forex market regulated?
A: Yes
B: No
C: Depends on the currency rates
D: Depends on the limit order
Correct answer- A
Q3 What is the role of arbitrageurs in Forex market?
A: Outguess the market in an attempt to take profits
B: Make profits through a spread between the offer and bid rates of exchange
C: Avail the benefits of the minor inconsistencies that happen to take place in the market
D: Required for purchasing foreign goods
Correct answer- C
Q4 What happens in a deep Forex market?
A: Suddenly few massive movements are observed in the exchange rates
B: Speculators are most likely to lose
C: Suddenly there are many massive movements in the exchange rates
D: There is absolutely no scope for arbitrage
Correct answer- A
Q5 Are bitcoins legal in Forex trading?
A: Yes
B: No
C: They are only legal in the US
D: Only legal when the exchange rates are high.
Correct answer- A
Q6 Why are forward deals conducted?
A: For more profits in the long run.
B: To act as an alternative of over the counter trading
C: To cover future movements in exchange rates
D: To act as an alternative of limit order
Correct answer- C
Q7 Can you exactly know which currency will go up and down?
A: Yes
B: No
C: Varies from currency to currency
D: Depends on the platform you choose for Forex trading
Correct answer- B
Q8 Can dividends be paid through derivatives?
A: Yes
B: No
C: All dividends can be paid through derivatives, with the exception of total return equity swap
D: Depends on the current currency rate
Correct answer- A
Q9 What is a pip?
A: Smallest whole increment in a Forex pair
B: Largest whole increment in a Forex pair
C: Instrument to determine currencies
D: Instrument to check the fluctuating currency rates
Correct answer- A
Q10 What is a lot?
A: A unit of measurement that is equal to 200,000 units of currency
B: A unit of measurement that is equal to 500,000 units of currency
C: A unit of measurement that is equal to 100,000 units of currency
D: A unit of measurement that is equal to 100,00,00 units of currency
Correct answer- C
Q11 What does a margin mean in Forex?
A: The amount by which you lose or gain money
B: The unit of exchange rate
C: An alternate term for pip
D: The amount which is necessary for opening a new Forex position with the Forex broker like CMC Markets
Correct answer- D
Q12 What is a future contract?
A: A contract that determines the upcoming exchange rates
B: A contract that determines the amount of profit that you are likely to incur
C: A contract between two parties dictating a predetermined date in future for selling the underlying assets
D: A contract between two parties dictating which party will incur profits from the sale of an asset
Correct answer- C
Q 13 What is a swap?
A: A process of swapping profits between two parties
B: A process of swapping the buying or selling order between two parties
C: A process of determining the time to sell a particular asset between two parties
D: A process of agreement between two parties where both the parties agree on exchanging a particular series of cash flow
Correct answer- D
Q13 What is a forward contract?
A: A contract between two parties dictating which party buys or sells the particular underlying asset at a predetermined date in future.
B: A contract between two parties dictating a predetermined date in future for selling the underlying assets
C: A contract between two parties which determines which party will initiate the sap
D: A contract for determining the exchange rates
Correct answer- A
Q15 What is a margin call?
A: The closing exchange rates
B: The rates at which a forward contract is dictated
C: The amount which is necessary for opening a new Forex position
D: The automatic closing of a particular position if the level of margin of that position falls below the margin call level of the chosen Forex trading platform
Correct answer- D
Q16 Does the foreign exchange market have a geographical dispersion?
A: Yes
B: No
C: Depends on the currency rates
D: Varies from time to time
Correct answer- A
Q17 Is currency speculation accepted worldwide?
A: Yes
B: No. Currency speculation is suspected in a large number of countries.
C: Only when there is a swap between two parties.
D: Only when there is a forward contract between two parties.
Correct answer- B
Q 18 What is risk aversion?
A: Risk aversion is a particular trading behavior observed in the foreign exchange market when any adverse event (that might affect market conditions) happens.
B: Risk aversion is a particular trading behavior observed in the foreign exchange market when the value of equity rises.
C: Risk aversion is a particular trading behavior observed in the foreign exchange market when the currency rate is constant.
D: Risk aversion is a particular trading behavior observed in the foreign exchange market when the currency rates fluctuate.
Correct answer- A