Forex Swaps and Rollover Interest MCQs
1. What is a forex swap?
A) The simultaneous buying and selling of the same currency pair
B) The exchange of foreign goods
C) A long-term loan agreement
D) The act of hedging in forex
Answer: A) The simultaneous buying and selling of the same currency pair
2. What is the purpose of a forex swap in trading?
A) To generate profit from short-term trades
B) To avoid holding a position overnight
C) To extend the settlement date of an open position without closing it
D) To calculate profit and loss
Answer: C) To extend the settlement date of an open position without closing it
3. What is rollover interest?
A) Interest paid or earned for holding a position overnight
B) Interest charged by the broker for placing a trade
C) The interest rate set by the central bank
D) A fee for trading in large lots
Answer: A) Interest paid or earned for holding a position overnight
4. When is rollover interest typically applied to forex positions?
A) Immediately after the trade is opened
B) Every weekend
C) At the end of each trading day
D) Once a month
Answer: C) At the end of each trading day
5. What determines whether a trader earns or pays rollover interest?
A) The size of the trade
B) The broker’s commission
C) The interest rate differential between the two currencies in the pair
D) The overall market trend
Answer: C) The interest rate differential between the two currencies in the pair
6. Which currency pair would likely result in earning rollover interest if the first currency has a higher interest rate than the second?
A) EUR/USD
B) AUD/JPY
C) GBP/CHF
D) USD/JPY
Answer: B) AUD/JPY
7. What happens if a trader holds a position in a currency with a lower interest rate against a higher interest rate currency?
A) The trader earns rollover interest
B) The trader is charged rollover interest
C) The position automatically closes
D) No interest is charged or paid
Answer: B) The trader is charged rollover interest
8. Which of the following can affect the amount of rollover interest?
A) Trading volume
B) Global news events
C) The interest rate differential between two currencies
D) The type of trading platform used
Answer: C) The interest rate differential between two currencies
9. What is a negative rollover?
A) Earning less interest than expected
B) Paying interest when holding a position overnight
C) Losing more than the margin
D) Interest lost due to slippage
Answer: B) Paying interest when holding a position overnight
10. Why might a forex trader want to avoid rollover fees?
A) To increase profit from currency price movements
B) To reduce their costs in long-term trading
C) To limit the impact of currency swaps
D) To earn more commission
Answer: B) To reduce their costs in long-term trading
