The Mechanics of Carry Trade
1 min read
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A step-by-step guide covering Python, SQL, analytics, and finance applications.
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Get full access to all Data Science, Machine Learning, and AI courses built for finance professionals.
One-time payment - Lifetime access
Or create a free account to start
A step-by-step guide covering Python, SQL, analytics, and finance applications.
Or create a free account to access more
Carry trade is a strategy in which an investor borrows or sells a financial instrument with low interest rate and uses the proceeds to lend or purchase a financial instrument with high interest rates.
For example, an investor can borrow money in another country's currency where the interest rates are very low, and lend the money in another country where the interest rates are high.
This video explains the concept of carry trade with the help of an example.
Source: Khan Academy