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Assume the interest rate on borrowings in Austria is 1 percent and the interest rate on deposits in Polish banks is 6 percent. A company

Assume the interest rate on borrowings in Austria is

1

percent and the interest rate on deposits in Polish banks is

6

percent. A company borrows in Euro, converts the money into Polish zloty and deposits it in a Polish bank. This situation is an example of what?

Question

10

Answer

Carry trade

Currency swap

Arbitrage

Forward exchange

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