Forex Foundations: Course Quiz

Course quiz

1. What does a rising EUR/USD price mean?

   The dollar has strengthened against the euro The euro has strengthened against the dollar Both currencies have risen
2. Where is the forex market located?

   The New York Stock Exchange A single exchange in London Nowhere in particular; it is a network of banks and brokers
3. Where do the prices on a retail platform originate?

   The broker invents them The interbank market, passed down through liquidity providers A government exchange rate
4. When is the forex market closed?

   Every night Never From Friday evening in New York to Monday morning in Sydney
5. A central bank unexpectedly raises interest rates. What usually happens to its currency?

   It weakens It strengthens Nothing, because rates do not affect currencies
6. Why might a widely expected rate rise barely move a currency on the day?

   Because the market had already priced it in Because rate rises never matter Because the market was closed
7. Which participant can influence a currency simply by changing interest rates?

   A hedge fund A central bank A retail broker
8. An exporter locks in today's exchange rate for a payment due in three months. What is this?

   Speculation Hedging Arbitrage
9. What do you own after buying EUR/USD as a CFD?

   10,000 euros in a bank account Nothing; you hold a contract with the broker on the price difference US dollars
10. What is swap?

    A fee for changing brokers The overnight interest charge or credit on an open position The spread
11. In USD/JPY at 150.00, which is the quote currency?

    USD JPY Neither
12. You expect the Swiss franc to strengthen against the dollar. What do you do with USD/CHF?

    Buy it Sell it Nothing; it cannot be traded
13. Which of these is a major pair?

    EUR/GBP USD/CAD AUD/NZD
14. GBP/USD is 1.2500 and USD/JPY is 150.00. Roughly what is GBP/JPY?

    120.00 187.50 0.0083
15. Why are exotic spreads so much wider than major spreads?

    Brokers charge more because the pairs are popular Far fewer participants quote them, so liquidity is thin Regulators require it
16. The quote is 1.2500 / 1.2503. At which price do you buy?

    1.2500 1.2503 1.25015
17. When are major-pair spreads usually tightest?

    During the London and New York overlap At the weekend Between New York's close and Tokyo's open
18. EUR/USD moves from 1.0850 to 1.0920. How many pips is that?

    7 70 700
19. On a standard lot of EUR/USD, what is one pip worth?

    $1 $10 $100
20. The price moves from 1.10000 to 1.10005. How much is that?

    5 pips Half a pip 50 pips
21. Which is a sign of thin liquidity?

    A tight spread Orders filling exactly at the quoted price Price gapping over levels without trading at them
22. Which session is generally the busiest?

    Sydney Tokyo London
23. Roughly when do London and New York overlap?

    00:00 to 04:00 UTC 13:00 to 17:00 UTC 20:00 to 24:00 UTC
24. Why is holding a position over the weekend riskier than overnight?

    Swaps are higher at weekends Prices can gap at the Monday open past any stop loss Brokers close accounts at weekends
25. What is the quote currency in AUD/USD?

    AUD USD Neither
26. A trader who expects the yen to weaken against the dollar should:

    Sell USD/JPY Buy USD/JPY Buy JPY/USD
27. Which cost applies to every trade the moment it is opened?

    The swap The spread A commission on the broker's profit