Which of the following refers to carry trade?
A) Providing insurance or hedging against the risks that arise from volatile changes in exchange rates
B) A transaction between two parties that involves exchanging currency and executing a deal at some specific date in the future
C) Simultaneous purchase and sale of a given amount of foreign exchange for two different value dates
D) The purchase of securities in one market for immediate resale in another to profit from a price discrepancy
E) Borrowing in one currency where interest rates are low and then using the proceeds to invest in another currency where interest rates are high
Correct Answer:
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