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Actual Carry Trade Profits Which Are Based on Actual Expected

Question 75

Multiple Choice

Actual carry trade profits which are based on actual expected depreciation indicate that:


A) uncovered interest parity does not hold systematically, and on average the carry trade is profitable.
B) uncovered interest parity holds, and there is no possibility of profitable interest arbitrage.
C) purchasing power parity is the best indicator of future currency depreciation.
D) profits in the carry trade are not taxed, which is a burden for emerging market economies.

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