Borrowing in One Currency at a Low Interest Rate and Lending

question 36

Multiple Choice

Borrowing in one currency at a low interest rate and lending in another currency at a higher interest rate while protecting against adverse changes in currency exchange rates with forward contracts is known as:

• A)currency swaps.
• B)carry trade.
• C)cover interest arbitrage.
• D)interest swaps.

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Definitions:

Reefer Trailers

Refrigerated trailers used for transporting perishable goods that require temperature-controlled environments.

Refrigerant

The cooling media used in air-conditioning and trailer reefer systems; a liquid capable of vaporizing at low temperatures such as ammonia, propane, R-12, R-134a, R-1234yf, etc.

Absolute Zero

The lowest possible temperature, at which all molecular movement stops, theoretically -273.15°C or 0 Kelvin.

Heat Energy

The form of energy transferred between systems or objects with different temperatures, often perceived as warmth.