Interest arbitrage is the profit-motivated purchase and sale of interest-paying securities denominated in different currencies.

Question

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Interest arbitrage involves taking advantage of differences in interest rates between two currencies by investing in the currency with the higher interest rate and borrowing in the currency with the lower interest rate. This can be done by purchasing and selling interest-paying securities denominated in different currencies. The goal is to earn a profit from the difference in interest rates.

Interest Arbitrage Is the Profit-Motivated Purchase and Sale of Interest-Paying