WorksheetsQ4 - Trading Quiz 8
Total questions: 20
Worksheet time: 3hrs 20mins
Rolling Spot Forex is one of the common ways to engage in forex trading.
Based on the statement below, which one is not accurate with regards to rolling spot forex?
It is done via OTC (Over-the-Counter)
It involves contract which is known as Contract for Difference
Trading will only involves the price of the underlying asset
It will require physical asset to be purchased
Pikaa engaged in trading for the past few days as recent data release conjured vast opportunity in the market.
Her trading account snapshot are as follows:
AUDUSD - Required margin: 5%
NZDUSD - Required margin: 4%
GBPUSD - Required margin: 2%
Position size: USD100,000
Equity: USD4,500
Based on the information above, what is her margin level and which scenario will she trigger if:
Margin call - 100%
Stop out - 50%
Margin level: 40.9%
Stopped out
Margin level: 40.9%
None will be triggered
Margin level: 244%
Margin call
Margin level: 244%
None will be triggered
Garret received an email from FBX broker that his account has triggered margin call.
Feeling perplexed, he investigate his account by looking at the recent snapshot:
Equity - USD35,000
GBPUSD - Required margin: 10%
EURUSD - Required margin: 9%
AUDUSD- Required margin: 12%
Position size: USD100,000
Based on the information above, how much free margin does Garret's account has?
USD4,000
-USD4,000
USD8,857
-USD8,857
Manisha is currently seeking for a broker to kickstart her trading with the capital of USD10,000. Below are her findings:
ZFX - 1:2000
FBS - 1:1000
XM - 1:500
Based on the information above, what is the trading power for each broker?
ZFX - USD20,000,000
FBS - USD10,000,000
XM - USD5,000,000
ZFX - USD2,000,000
FBS - USD10,000,000
XM - USD5,000,000
ZFX - USD20,000,000
FBS - USD1,000,000
XM - USD5,000,000
ZFX - USD20,000,000
FBS - USD10,000,000
XM - USD500,000
Why is leverage referred as double edged sword in forex trading?
Leverage allows you to control large sum of money with small sum of initial capital.
With $1,000 and 1:200 leverage, you can control investment up to USD200,000.
Leverage will amplify both our profit and loss capability.
As leverage increases, the amount of required margin decreases.
Asset with high liquidity tends to have tighter spread.
Based on the quote above, which statement below best describe this phenomenon?
High liquidity translates to high demand. Thus, brokers will have to keep the differences low for high demand products in order to avoid losing competitive edge.
Low difference between bid and ask for major products are possibly due to collusion in between several major brokers in order to monopolize the forex market.
The difference between bid and ask is lower due to high volatility in the market. It encourages people to trade more during such scenario.
Bid and ask is determined by a centralized system that governs the entire forex market. The changes will be based on policies that were introduced throughout each week.
Willy is a long-term trader whereby he holds his position for several weeks.
The past few days, he has been contemplating to close his 9.78 lot of BUY EURUSD as it has been in the deep profit region for quite some time.
If we ignore the triple charge on Wednesday, what will be his swap charges on this order if it was held for 25 working days?
Swap rate:
Long: -8.54
Short: 5.82
Contract size: 100,000
USD2,088.03
USD1,422.99
-USD2,088.03
-USD1,422.99
Duy is contemplating to trade forex as he had some additional funds laying around in his savings account.
He tends to have a preference over which forex pair he will trade but he forgot its category.
Based on his deduction, the forex pair will have the following characteristics:
1. Currency pair are paired together among all 7 major currencies (Big 7), excluding US dollar
2. It has slightly lower liquidity.
3. The spread cost is slightly higher.
Based on his deduction, what is this category of forex pair called?
Major Pair
Minor Pair
Exotic Pair
Emerging markets pair
Any orders held past Wednesday will subject to triple charge.
Based on the statement above, which explanation below best describe such scenario?
To account for Saturday and Sunday as it requires 2 working days to process the swap.
The swap was triple charged in order to account for processing fee that occurs in the backend.
It is based on general consensus that all forex brokers will need to charge triple.
The triple charge was initiated in order to pay access fee that is required by the liquidity provider.
Following the announcement of CPI data from UK, GBPJPY dropped from 162.994 to 150.883. It continued to drop further down to 139.812. What is the number of pip or point for the first and total drop in price?
First drop = 12111 points
Total drop = 23182 points
First drop = 1211.1 pips
Total drop = 231.82 pips
First drop = 121.11 pips
Total drop = 231.82 pips
First drop = 12.11 points
Total drop = 23.18 points
S&P500 experienced a sharp rebound as latest CPI data from the US foreshadows the Federal Reserve to dial down their efforts of policy tightening.
Based on the statement above, what is the relevance of an index?
An index can be used as a benchmark over a country's economy.
An index is being used as the benchmark for setting policies in other countries.
To gauge how well it is performing in order to execute risk management strategies on forex orders.
An index is used to execute speculative orders in the financial market.
Nasis opened 1.5 lot SELL order of EURUSD with the entry price of 1.00105 on Wednesday.
Following the release of positive US ADP Employment Data, he earned significant profit on his order.
The next day, he decided to close the order prior to Federal Reserve policy meeting later that night.
If the order was closed past Wednesday (which warrants for a triple charge in swap), what is his swap charge for this order?
Contract size for EURUSD: 100,000
Swap long: -2.71
Swap short: 1.98
USD8.91
-USD8.91
USD89.10
-USD89.10
Following recent announcement of US CPI data, US dollar experienced significant downfall as investors shifted their focus into non-dollar assets.
Due to this, Garret, whom previously opened 5.6 lot of SELL order on GBPUSD suffered significant losses. His entry price was at 1.19420 and his closing price is at 1.22180.
Based on the info above, what is the profit or loss for his order?
Contract size: 10,000
-USD15,456.00
-USD1,545.60
USD1,545.60
USD15,456.00
According to reports, Yum Brand's franchise, Americana Restaurants has recently initiated an IPO at Abu Dhabi Securities Exchange. After a week of IPO, its shares is trading at 2.6% premium over its IPO price.
Based on the statement above, why do companies aim for IPO?
To raise funds for the company in order to channel it into their projects.
To diversify the company's portfolio of investment by issuing shares.
To increase the value of the company by enabling shareholders to own a percentage of the company publicly.
To gain exposure into the oil and gas sector by issuing shares in the local financial market.
Kush wanted to trade on several currency pairs due to abundance of opportunities that it can offer. He was contemplating to open several order as below:
GBPUSD - 2.5 lot
AUDUSD - 1.7 lot
EURUSD - 9.8 lot
Based on the data above, what is the pip value for each pair if the contract size is 10,000?
GBPUSD - USD 2.50
AUDUSD - USD 1.70
EURUSD - USD 9.80
GBPUSD - USD 25.00
AUDUSD - USD 17.00
EURUSD - USD 98.00
GBPUSD - USD 2.50
AUDUSD - USD 1.70
EURUSD - USD 98.00
GBPUSD - USD 2.50
AUDUSD - USD 17.00
EURUSD - USD 98.00
Central banks will generally provide insight or signal with regards to their future plan of monetary policy. These signals can be categorized as hawkish or dovish.
Based on the statement above, what is the distinct difference in between hawkish and dovish?
A dovish term is given when the central bank elaborate positive expectation towards the economy.
A hawkish term is referring to the central bank's willingness to reduce interest rates.
The term hawkish and dovish is given when the central bank provide positive or negative signal respectively.
Both terms carries the same meaning and its explanation is shared among one another.
Born is writing a report to predict the outcome of Nonfarm Payrolls report from the US. In order to do so, he will be required to refer to other data that was released by the US. Based on his experience, the data will have following characteristics:
1. Gauge the monthly performance of employment market.
2. Data collection is initiated upon private enterprises every month.
From the characteristics above, which data is he referring to?
ADP Nonfarm Employment Change
Unemployment Rate
Nonfarm Payrolls
Manufacturing Employment Index
Rising price of goods and services is one of the main fundamentals of world economy. If controlled, it will bring to a stability for the economy and at the same time, growth.
From the statement above, if inflation is not controlled effectively by the government and led to an increase in unemployment, which phenomenon below best describe this?
Deflation
Stagflation
Hyperinflation
Disinflation
As Covid-19 struck the whole world, many nations began to enforce lockdowns, which led to a slowdown in terms of economy as well as lower consumer spending.
Based on the scenario above, which action should be taken by the central bank and why?
Increase interest rates
This will promote more spending as interest provided from savings will be higher.
Increase interest rates
This will help banks to generate higher income that will be funnel into the economy through internal spending.
Decrease interest rates
This will help to encourage spending as savings rate and loan rates are cheaper.
Decrease interest rates
This will help to lower business expansion so that local businesses could monopolize the market.
Relationship in between leverage and margin can be derived as the following formula:
Leverage = 1 / Margin Requirement
or
Margin Requirement = 1 / Leverage
Based on the formula above, what is the relationship in between both leverage and margin?
Inverse relationship
Exponential relationship
Linear relationship
Parabolic relationship
