NO.PZ202212300200001702
问题如下：
Determine under what circumstances the carry trade
will not be executed.
选项：
解释：
Correct Answer:
Carry trade is not
executed when the uncovered interest rate parity holds.
In this case, the
interest rate differential is completely offset by the depreciation of the
currency, making carry trade meaningless.
The carry trade cannot be executed under the following circumstances:1) the uncovered interst rate parity holds implying that any excess return in GBP will be offseted by the depreciation of GBP. 2) the increase level of volatility between USD-GBP currency pair. 3)an unexpected increase in USD interest rate will force the trader to have higher liquidity needs and even terminate the carry trade due to the higher borrowing cost and the lender will request for margin.
