Question: A trader puts on a so-called carry tradeposition (borrowing using short-term financing to purchase longer-term instruments). The carry trade will earn the highest return if

A trader puts on a so-called carry tradeposition (borrowing using short-term financing to purchase longer-term instruments). The carry trade will earn the highest return if

long term interest rates rise

short term interest rates rise

short term interest rates fall

long term interest rates fall

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