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Question
The interest rate on borrowings in Rhodia is 2 percent and the interest rate on bank deposits in Maritia is 7.5 percent. In this scenario, a carry trade would be to:A.borrow money in Maritian currency, convert it into Rhodian currency, and deposit it in a Rhodian bank.
B.borrow money in Rhodian currency and invest in stocks with good growth potential in Rhodia.
C.borrow money in Rhodian currency, convert it into Maritian currency, and deposit it in a Maritian bank.
D.invest in bank deposits of Maritia and reinvest the earnings in Rhodia.
E.invest in bank deposits of Rhodia and reinvest the earnings in Maritia.
Answer
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