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Part $1$

$[$Related

to Solved Problem

$5\mathrm{.}2$A$]$

An article on the American Express website observes that$$ "often, an interest carry trade involves maturity$$ mismatch, since$$ longer$-$term lending typically carries higher interest rates than$$ short$-$term."

How might you be able to make a profit from the fact that$$ long$-$term interest rates are typically higher than$$ short$-$term interest$$ rates?

Part $2$

A$.$

By purchasing more$$ long$-$term securities than$$ short$-$term securities$.$

B$.$

By borrowing long term and investing the funds short term.

C$.$

By borrowing short term and investing the funds long term.

D$.$

By purchasing more$$ short$-$term securities than$$ long$-$term securities$.$