The Speculative Element of the Carry Trade Is That Its

Multiple Choice

The speculative element of the carry trade is that its success is based upon a belief that:

A) there will be no adverse movement in exchange rates or interest rates.
B) liquidity is the key factor in determining interest rates.
C) increasing money supply will not drive inflation.
D) spot exchange rates are more favorable than forward exchange rates.
E) hedging insures a company against foreign exchange risks.