Forex Market Structure MCQs

1. What does “Forex” stand for?
A) Foreign Exchange
B) Future Exchange
C) Financial Exchange
D) Free Exchange
Answer: A) Foreign Exchange

2. Which of the following is the largest financial market in the world?
A) Stock Market
B) Commodity Market
C) Forex Market
D) Bond Market
Answer: C) Forex Market

3. What is the primary purpose of the Forex market?
A) To trade stocks
B) To exchange currencies
C) To buy commodities
D) To invest in bonds
Answer: B) To exchange currencies

4. Which participant is considered a market maker in the Forex market?
A) Central banks
B) Retail traders
C) Corporations
D) Hedge funds
Answer: A) Central banks

5. In Forex trading, what is a “pip”?
A) A type of order
B) The smallest price move in a currency pair
C) A trading strategy
D) A type of currency
Answer: B) The smallest price move in a currency pair

6. What are currency pairs?
A) Two different currencies traded together
B) Two stock shares traded together
C) Two commodities traded together
D) Two bonds traded together
Answer: A) Two different currencies traded together

7. Which of the following is NOT a type of Forex market?
A) Spot market
B) Forward market
C) Options market
D) Futures market
Answer: C) Options market

8. Who are considered retail traders in the Forex market?
A) Large banks and institutions
B) Individual traders
C) Corporations
D) Central banks
Answer: B) Individual traders

9. What is the function of Forex brokers?
A) To create currencies
B) To facilitate trading between buyers and sellers
C) To set exchange rates
D) To regulate the Forex market
Answer: B) To facilitate trading between buyers and sellers

10. Which of the following factors can influence currency exchange rates?
A) Economic indicators
B) Political stability
C) Interest rates
D) All of the above
Answer: D) All of the above