Question 12 You observe the following data from the international market: Spot Rate Expected Spot Rate in Interest Rate Per Annum 1 year AUD 2% 1.37 AUD/USD 1.33 USD 3.50% 1.18 USD/GBP 1.21 3% GBP You are considering to use a carry trade. Which of the following transactions you should execute in order to make a profit? Borrow AUD, translate to GBP, invest in GBP and translate back to AUD gain 1.5% Borrow GBP, translate to AUD, invest in AUD and translate back to GBP. gain 1.5% Borrow GBP, translate to AUD, invest in AUD and translate back to GBP, loss 15% MILE PL USD 3.50% USD/GBP 1.21 1.18 GBP 3% You are considering to use a carry trade. Which of the following transactions you should execute in order to make a profit? O Borrow AUD, translate to GBP, invest in GBP and translate back to AUD gain 1.5% Borrow GBP, translate to AUD, invest in AUD and translate back to GBP, gain 15% Borrow GBP, translate to AUD, invest in AUD and translate back to GBP, los 1.5% Borrow AUD, translate to GBP, invest in GBP and translate back to AUD, los 15%