A fixed-income manager is considering a foreign currency fixed-income investment in a relatively high-yielding market, where she
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A fixed-income manager is considering a foreign currency fixed-income investment in a relatively high-yielding market, where she expects bear flattening to occur in the near future and her lower-yielding domestic yield curve to remain stable and upward-sloping. Under this scenario, which of the following strategies will generate the largest carry benefit if her interest rate view is realized?
a. Receive-fixed in foreign currency, pay-fixed in domestic currency
b. Receive-fixed in foreign currency, pay-floating in domestic currency
c. Receive-floating in foreign currency, pay-floating in domestic currency
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