Jin-Lo is investing money for his company. He notices that the interest rate on borrowing in Jakarta is 2 percent and the interest rate on bank deposits in Warsaw is 7.5 percent. In this situation, a carry trade would occur when Jin-Lo
A) borrows money in Warsaw currency, converts it into Jakarta currency, and deposits it in a Jakarta bank.
B) borrows money in Jakarta currency and invests in stocks with good growth potential in Jakarta.
C) borrows money in Jakarta currency, converts it into Warsaw currency, and deposits it in a Warsaw bank.
D) invests in bank deposits of Warsaw and reinvests the earnings in Jakarta.
E) invests in bank deposits of Jakarta and reinvests the earnings in Warsaw.
Correct Answer:
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