Evaluate each statement independently and select the active currency approach it best describes. Justify each choice.

Kamala Gupta, a currency management consultant, is hired to evaluate the performance of two portfolios. Portfolio A and Portfolio B are managed in the United States and performance is measured in terms of the US dollar (USD). Portfolio A consists of British pound (GBP)
denominated bonds and Portfolio B holds euro (EUR) denominated bonds.
Gupta calculates a 19.5% domestic-currency return for Portfolio A and 0% domesticcurrency return for Portfolio B.

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Template for Question 6 Gupta's Statements "Many traders believe that it is not necessary to examine factors like the current account deficit, inflation, and interest rates because current exchange rates already reflect the market view on how these factors will affect future exchange rates." Active Currency Justification Approach (circle one) carry trade technical analysis economic fundamental "The six-month interest rate in India is 8% compared to 1% in the United States. This presents a yield pick-up opportunity." carry trade technical analysis economic fundamental "The currency overlay manager will estimate the fair value of the currencies with the expectation that observed spot rates will converge to long-run equilibrium values described by parity conditions." carry trade technical analysis economic fundamental