#1
What is the primary purpose of the foreign exchange market?
To facilitate the trading of foreign currencies
ExplanationFacilitating trading of currencies.
#2
Which of the following is NOT a major currency pair in foreign exchange trading?
USD/INR
ExplanationUSD/INR is not a major currency pair.
#3
What is the main function of a forex broker?
To execute trades on behalf of clients
ExplanationForex brokers execute trades for clients.
#4
What is the term used to describe the price at which a trader can sell a currency pair?
Bid price
ExplanationBid price is selling price in a currency pair.
#5
What is a 'lot' in forex trading?
The minimum trade size
ExplanationLot is the minimum trade size.
#6
What is the term used to describe a sudden and significant change in the price of a currency pair?
Volatility
ExplanationVolatility is sudden and significant price change.
#7
What does 'pip' stand for in foreign exchange trading?
Price interest point
ExplanationPIP stands for Price interest point.
#8
What is the role of a 'spread' in foreign exchange trading?
To measure the difference between bid and ask prices
ExplanationSpread measures bid-ask price difference.
#9
What is the significance of central banks in the foreign exchange market?
To conduct monetary policy and intervene in currency markets
ExplanationCentral banks manage policy and currency markets.
#10
What is 'leverage' in foreign exchange trading?
The ability to make larger trades with a smaller amount of capital
ExplanationLeverage allows large trades with less capital.
#11
Which economic indicator is commonly used by forex traders to gauge a country's economic health?
All of the above
ExplanationAll listed indicators are used for economic health assessment.
#12
What does the acronym 'ECN' stand for in forex trading?
Electronic Communication Network
ExplanationECN stands for Electronic Communication Network.
#13
What is 'carry trade' in the context of foreign exchange trading?
Borrowing in a currency with low interest rates to finance investments in higher-yielding assets
ExplanationCarry trade involves borrowing low to invest high.