Assume That the Interest Rate on Borrowings in Japan Is

Multiple Choice

Assume that the interest rate on borrowings in Japan is 3 percent while the interest rate on bank deposits in a U.S. bank is 5 percent. Laura, an active currency trader, borrows in Japanese yen, converts the money into U.S. dollars and deposits it in a U.S. bank. Laura is engaging in

A) countertrading.
B) hedging.
C) currency swap.
D) arbitrage.
E) carry trade.