Investors engage in ..... when they move funds into foreign currencies in order to take advantage of interest rates abroad that are higher than domestic interest rates.

ACCOUNTING

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Investors engage in ____ when they move funds into foreign currencies in order to take advantage of interest rates abroad that are higher than domestic interest rates.

A	long positions
B	short positions
C	interest arbitrage
D	currency arbitrage

Explanation:

Detailed explanation-1: -Covered interest rate arbitrage is the practice of using favorable interest rate differentials to invest in a higher-yielding currency, and hedging the exchange risk through a forward currency contract.

Detailed explanation-2: -What is international arbitrage? International arbitrage is the act of buying and selling the same quantity of an asset in two different markets simultaneously. International arbitrage works on the principle of price differential created due to the inefficiencies of the market.

There is 1 question to complete.

GENERAL KNOWLEDGE

GK

ACCOUNTING