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Basic Question 3 of 3
The interest rate in Japan is 2%. It is 3% in the U.S. To implement a carry trade strategy an investor would:
B. borrow $ in the U.S. , convert it to be Yen and invest it in Japan.
C. Invest Yen in Japan first, and later use forward contracts to convert Yen into $.
A. borrow Yen in Japan, convert it to be $ and invest it in the U.S.
B. borrow $ in the U.S. , convert it to be Yen and invest it in Japan.
C. Invest Yen in Japan first, and later use forward contracts to convert Yen into $.
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Learning Outcome Statements
describe the carry trade and its relation to uncovered interest rate parity and calculate the profit from a carry trade;
CFA® 2025 Level II Curriculum, Volume 1, Module 8.