Assume That the Interest Rate on Borrowing in Japan Is

question 26

Multiple Choice

Assume that the interest rate on borrowing in Japan is 1 percent, while the interest rate on deposits in Australian banks is 5 percent. A trader borrows in yen and then converts the money into Australian dollars and deposits it in an Australian bank to make a 4 percent margin. Which type of trade is this an example of?

• A) swing trade
• B) carry trade
• C) channel trade
• D) price action trade

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Definitions:

Cognitive Map

A visuospatial mental representation of an environment.

Latent Learning

Learning that takes place in the absence of reinforcement.

Behavior Modification

The use of behavioral change techniques to alter maladaptive behaviors into more healthy or desirable ones.

Add a Stimulus

The act of introducing a new sensory input or trigger in an environment to elicit a response in an organism or system.