Tuesday, June 07, 2005

Little gain

Safe Haven | Death of the Carry Trade
Indeed, the engine driving financial profits is quite simple: borrow at low short-term interest rates, and lend at higher longer-term interest rates. In the Carry Trade, to enhance returns and make them exciting, leverage is used. For liquid assets like Treasuries and Agency Securities, leverage of over 25 to 1 is possible.
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