What does the term "carry trade" mean? Group of answer choices Borrow in the domestic currency to earn only the higher yield of the dollar implied by the failure of uncovered interest rate parity (UIRP). Borrow in foreign currency to earn only the expected capital appreciation of the dollar implied by the failure of UIRP. Borrow in the domestic currency to earn both the higher yield and the expected capital appreciation of the dollar implied by the failure of UIRP. Borrow in the foreign currency to earn both the higher yield and the expected capital appreciation of the dollar implied by the failure of UIRP.

International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter20: Short-term Financing
Section: Chapter Questions
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What does the term "carry trade" mean?
Group of answer choices
Borrow in the domestic currency to earn only the higher yield of the dollar implied by the failure of uncovered interest rate parity (UIRP).
Borrow in foreign currency to earn only the expected capital appreciation of the dollar implied by the failure of UIRP.
Borrow in the domestic currency to earn both the higher yield and the expected capital appreciation of the dollar implied by the failure of UIRP.
Borrow in the foreign currency to earn both the higher yield and the expected capital appreciation of the dollar implied by the failure of UIRP.
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