Positive Carry
Barron's Finance & Investment Dictionary:
Top
Positive Carry
situation in which the cost of money borrowed to finance securities is lower than the yield on the securities. For example, if a fixed-income bond yielding 10% is purchased with a loan bearing 8% interest, the bond has positive carry. The opposite situation is called Negative Carry.
| Position Trader, Position Limit | |
| Positive Yield Curve, Post |
Investopedia Financial Dictionary:
Top
Positive Carry
A strategy of holding two offsetting positions, one of which creates an incoming cashflow that is greater than the obligations of the other.
Investopedia Says:
Similar to arbitrage, positive carries generally occur in the currency market where interest paid to investors in one currency is more than they have to pay to borrow in another currency.
Another example of a positive carry would be borrowing $1000 from the bank at 5% and investing it into a bond paying 6%. Thus, the coupon on the bond would pay more than the interest owing on the loan to the bank, and you pocket the 1% difference.
Related Links:
Profiting from arbitrage is not only for market makers--retail traders can find opportunity in risk arbitrage. Trading the Odds with Arbitrage
Forex trading with the martingale strategy comes with a sure payoff, but only if you have infinite resources. Forex: FX Trading The Martingale Way
Post a question - any question - to the WikiAnswers community:
Copyrights:
Barron's Finance & Investment Dictionary
Dictionary of Finance and Investment Terms. Copyright © 2010 by Barron's Educational Series, Inc. All rights reserved.
Read more
Mentioned in
unsigned integer
(mathematics)
alpha radiation
(Science)
Negative Carry
(in banking)
Code of the Secret Service
(1939 Crime Film)
» More