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

Question

Jazlynn Hammond

Social Studies

30 October, 04:34

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

+5

Answers (1)

Know the Answer?

Jared Payne · Answer 1

A carry trade occurs when jinlo borrow in Jakarta at 2% and go and deposit the money in the bank in Warsaw so as to have the 7.5% interest on deposit

Explanation:

A carry trade is a trading strategy that involves borrowing at a low-interest rate and investing in an asset that provides a higher rate of return. So in this case, Jinlo borrowed at low interest and deposited to receive high interest, so a carry trade is what he did.