Question

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 ina. price action trade

b. swing trade
c. carry trade
d. channel trade

Answer 1

c. carry trade

Step-by-step explanation:

Carry Trade can be defined as a low-interest rate borrowing fund and invest those funds in high yield assets. In this way, your profit is the difference between the lower interest rate and the asset. Carry trade is a form of intermediation because you are getting good at a fixed price (low-interest rate) and at a high price (high return rate).