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Actual Carry Trade The interest rate is 1% in country A, and 6% in B, and the exchange rate is 1A = 2B (you
Actual Carry Trade The interest rate is 1% in country A, and 6% in B, and the exchange rate is 1A = 2B (you need 2 of B to buy 1 of A). You begin a 1-year Carry Trade by borrowing 1000 units of currency A. (a) Explain in WORDS what to do now and in 1 year. (b) Assume the actual exchange rate in 1 year is 1A = 1.9B. Do the numerical details of the trade and indicate your actual Profit or Loss in 1 year in currency A after 1 year.
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The Economics Of The Environment
Authors: Peter Berck, Gloria Helfand
1st Edition
978-0321321664, 0321321669
