Multiple Choice
Assume that the interest rate on borrowings in Country A is 2 percent and that on bank deposits in Country B is 7.5 percent.A carry trade in this scenario would be to:
A) borrow in Country B's currency, then convert the money into Country A's currency and deposit it in a bank in Country A.
B) borrow in Country A's currency, and invest in stocks with good growth potential in Country A.
C) borrow in Country A's currency, then convert the money into Country B's currency and deposit it in a bank in Country B.
D) invest in bank deposits of Country B and reinvest the earnings in Country A.
Correct Answer:
Verified
Correct Answer:
Verified
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