Advantages Of FOREX Market
This quiz tests you on Advantages of Forex Market. In this market, people try to make an additional income by trading currencies based on the buying and selling rates at a given time across the world. Take up the quiz below and get to see if you understand all the secrets one can use to increase their returns from the trade.
- 1.
Which of the following is an advantage of the forex market over the stock market?
- A.
Low/No commissions
- B.
You can become a part owner of a company
Correct Answer
A. Low/No commissionsExplanation
The advantage of the forex market over the stock market is the low or no commissions involved. In the forex market, traders do not have to pay hefty fees to brokers or exchanges for executing trades. This is in contrast to the stock market, where commissions are typically charged for buying and selling stocks. The absence of commissions in the forex market allows traders to save on transaction costs and potentially increase their overall profits.Rate this question:
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- 2.
Which of the following is an advantage of the forex market over the stock market?
- A.
No one can manipulate the market
- B.
You can own shares in a company
Correct Answer
A. No one can manipulate the marketExplanation
Because of the huge amount of money traded every day, no one, not even central banks, can influence the price of a currency pair. As an example, the Bank of Japan tried to lower the yen in 2011, only to see it go to alltime highs as traders pushed the price back up. This is truly a free market!Rate this question:
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- 3.
Forex is open 24 hours, Sunday 4:00 pm- Friday 4:00 pm
- A.
Yerp!
- B.
Nope!
Correct Answer
A. Yerp!Explanation
Forex is a 24 hour market so there's no reason to worry about a stock dropping before the market opens and you having to sell at a awful cost. You can keep track of your investments day-round! And there are no holidays too!Rate this question:
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- 4.
There are no restrictions on short-selling in the forex markets
- A.
True, it's just as easy to make money on the way down as it is on the way up
- B.
False, there are restrictions to short-selling just like in the stock market.
Correct Answer
A. True, it's just as easy to make money on the way down as it is on the way upExplanation
because buying one currency means selling another, there is no restrictions on short selling. If you think a currency will lose value, just click sell! No need to borrow shares or worry about margin calls.Rate this question:
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- 5.
Reasons for smaller exposure to foreign exchange than US money center are
- A.
Regulation
- B.
Prudent Individuals
- C.
Smaller size of assets
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
The reasons for smaller exposure to foreign exchange than US money center are regulation, prudent individuals, and smaller size of assets. Regulation refers to the rules and guidelines set by regulatory bodies that limit the extent to which a financial institution can engage in foreign exchange activities. Prudent individuals indicate that individuals or institutions may choose to have smaller exposure to foreign exchange to minimize risk. The smaller size of assets implies that smaller financial institutions may have limited resources to engage in foreign exchange activities compared to larger money centers. Hence, all of the above reasons contribute to the smaller exposure to foreign exchange.Rate this question:
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