Bid and Ask Prices MCQs

1. In Forex trading, the “bid price” is defined as:
A) The price at which a trader can sell a currency pair
B) The price at which a trader can buy a currency pair
C) The difference between the buy and sell prices
D) The price of the currency in the market
Answer: A) The price at which a trader can sell a currency pair

2. The “ask price” refers to:
A) The price at which a trader can buy a currency pair
B) The price at which a trader can sell a currency pair
C) The total number of trades in the market
D) The average price over a period
Answer: A) The price at which a trader can buy a currency pair

3. The difference between the bid price and the ask price is called the:
A) Margin
B) Spread
C) Leverage
D) Commission
Answer: B) Spread

4. If the bid price for EUR/USD is 1.1200 and the ask price is 1.1205, what is the spread?
A) 0.0005
B) 0.0010
C) 0.0050
D) 0.0100
Answer: A) 0.0005

5. Which of the following statements is true about the bid and ask prices?
A) The bid price is always higher than the ask price.
B) The ask price is always lower than the bid price.
C) The bid price is lower than the ask price.
D) The bid and ask prices are always the same.
Answer: C) The bid price is lower than the ask price.

6. If a trader wants to enter a position in the market, they will buy at the:
A) Bid price
B) Ask price
C) Midpoint price
D) Closing price
Answer: B) Ask price

7. If a trader wants to exit a position by selling, they will sell at the:
A) Ask price
B) Bid price
C) Midpoint price
D) Opening price
Answer: B) Bid price

8. The bid-ask spread can be influenced by:
A) Market liquidity
B) Economic news
C) Time of day
D) All of the above
Answer: D) All of the above

9. A narrower bid-ask spread usually indicates:
A) A less liquid market
B) A more liquid market
C) Higher trading costs
D) Increased volatility
Answer: B) A more liquid market

10. If the bid price for GBP/USD is 1.3000 and the ask price is 1.3003, what would be the cost to buy one lot of GBP/USD?
A) $1.3000
B) $1.3003
C) $1.3005
D) $1.3007
Answer: B) $1.3003