CFA Practice Question

There are 253 practice questions for this study session.

CFA Practice Question

In a carry trade, an investor:
A. short-sell a low-yielding currency and invests the funds in a high-yielding currency.
B. short-sell a high-yielding currency and invests the funds in a low-yielding currency.
C. invests in a high-yielding currency and then uses currency forward contracts to hedge.
Explanation: A carry trade is essentially a leveraged position. An investor buys high interest currencies and sells currencies with low interest rates.

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