The Theory of Carry Trade Profits Focuses on the Reward-Risk

question 59

Multiple Choice

The theory of carry trade profits focuses on the reward-risk ratio. Analysts believe profits from the carry trade exist because:

• A) once the big profits have been taken, the remaining profits are too small for the level of risk undertaken.
• B) the larger the reward, the smaller the risk.
• C) investors will only seek returns that carry no risk.
• D) the market has been saturated with too much financial trading, and it needs to settle down before investors would be willing to try again.

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Definitions:

Glycolysis

A metabolic process that breaks down glucose to produce energy in the form of ATP.

ATP

A molecule known as adenosine triphosphate serves as the primary energy carrier within cells, essential for metabolism.

Volume of Oxygen

The amount of oxygen the body can utilize during maximum effort, often used as a measure of cardiovascular fitness.

Consumed

The act of eating, drinking, or otherwise ingesting food or substances into the body.