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

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With a higher interest rate on bank deposits in Maritia than the interest rate on borrowing in Rhodia, one can take advantage of the difference by borrowing money in Rhodian currency, converting it into Maritian currency, and depositing it in a Maritian bank. This will earn a higher interest rate on the deposited amount and the interest earned will be greater than the borrowing cost in Rhodia.

The Interest Rate on Borrowings in Rhodia Is 2 Percent