Question

What is a carry trade?

		Borrowing at a low-interest rate and investing in an asset that provides a higher rate of return.
		Exploiting an arbitrage opportunity resulting from a pricing discrepancy among three different currencies in the foreign exchange market.
		Borrowing at a high-interest rate and investing in an asset that provides a lower rate of return.
		Investing in an asset that drops below support lines.

Answer 1

Answer :-

Carry trade is borrowing at a low interest rats and investing in an asset that provides a higher rate of return.

Explanation :-

Carry trade is a trading strategy in which you borrow at a low interest rate and you invest that borrowed amount in any asset or security which yields a higher rate of return.

For Example :- You borrow $100,000 at interest rate of 4% and buy a security which provides 8% return then the difference is 4% and which is the profit. This strategy is carry trade.