Spread and Slippage MCQs

1. What does the “bid price” represent in Forex trading? A) The price at which you can buy a currency pair B) The price at which you can sell a currency pair C) The average price over a specific period D) The price of a currency in another currency Answer: B) The price at which you can sell a currency pair 2. The “ask price” is best described as: A) The price at which you can buy a currency pair B) The price at which you can sell a currency pair C) The difference between two currencies D) The market’s closing price Answer: A) The price at which you can buy a currency pair 3. The difference between the bid price and the ask price is known as the: A) Spread B) Margin C) Leverage D) Commission Answer: A) Spread 4. If the bid price of USD/JPY is 110.50 and the ask price is 110.55, what is the spread? A) 0.05 B) 0.10 C) 0.15 D) 0.20 Answer: A) 0.05 5. When a trader wants to buy a currency pair, they will transact at the: A) Bid price B) Ask price C) Midpoint price D) Last traded price Answer: B) Ask price 6. To sell a currency pair, a trader will execute the trade at the: A) Ask price B) Bid price C) Market price D) Opening price Answer: B) Bid price 7. A wider bid-ask spread generally indicates: A) Higher market liquidity B) Lower market liquidity C) More stable prices D) Increased trading volume Answer: B) Lower market liquidity 8. In Forex, which of the following factors can affect bid and ask prices? A) Economic news releases B) Market demand and supply C) Time of day D) All of the above Answer: D) All of the above 9. A trader wishes to enter a long position. At what price will they enter the trade? A) The bid price B) The ask price C) The previous closing price D) The opening price Answer: B) The ask price 10. If the bid price for EUR/USD is 1.1200 and the ask price is 1.1202, what is the bid-ask spread? A) 0.0002 B) 0.0004 C) 0.0001 D) 0.0010 Answer: B) 0.0002