When there is a disparity in interest rates between countries, investors have an opportunity to employ a currency trading strategy called the carry trade. By borrowing in one currency and buying bonds in another, based on certain economic assumptions, an investor can execute a carry trade. But how does this strategy work and what type of environment is required? Salman Khan of the Khan Academy explains in a simplified example.

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Is Immigration Pro-Growth? Tue 18 Jun 13 \| 07:25 PM	Is the Rally Over? Tue 18 Jun 13 \| 07:15 PM	NSA Says 'Snooping' Works Tue 18 Jun 13 \| 07:00 PM	No Huddle Offense: Market Favoring Old Tech? Tue 18 Jun 13 \| 06:58 PM	Regulations Suffocating Airgas? Tue 18 Jun 13 \| 06:45 PM
Lightning Round Tue 18 Jun 13 \| 06:40 PM	How Harris Corp. Can Unlock Value Tue 18 Jun 13 \| 06:25 PM	Intuitive Surgical & Potash to Head Higher? Tue 18 Jun 13 \| 06:15 PM	They Came, They Saw, But Did the G8 Deliver? Tue 18 Jun 13 \| 06:09 PM	Mad Money, June 18, 2013 Tue 18 Jun 13 \| 06:00 PM
Market Might Head Lower on the Fed: Cramer Tue 18 Jun 13 \| 06:00 PM	Fast Money Final Trade Tue 18 Jun 13 \| 05:58 PM	You Tweet It, We Trade It! Tue 18 Jun 13 \| 05:50 PM	The Business of Golf Tue 18 Jun 13 \| 05:45 PM	Yellen to Succeed Bernanke? Tue 18 Jun 13 \| 05:40 PM
Debate It! Bull vs. Bear on FedEx Tue 18 Jun 13 \| 05:30 PM	Obama 'Essentially Fired' Bernanke: Meyer Tue 18 Jun 13 \| 05:30 PM	Options Action: Bullish Bet on FedEx Tue 18 Jun 13 \| 05:29 PM	Stock Pops & Drops Tue 18 Jun 13 \| 05:20 PM	Fear & Loathing in IPO Land Tue 18 Jun 13 \| 05:15 PM
Decoding the 'Taper' Talk Tue 18 Jun 13 \| 05:00 PM	Fast Money, June 18, 2013 Tue 18 Jun 13 \| 05:00 PM	'Full-Speed Ahead' Before Fed Meeting Tue 18 Jun 13 \| 05:00 PM	Maria's Market Insight Tue 18 Jun 13 \| 04:59 PM	Maria's Observation: Markets Wait on Fed Tue 18 Jun 13 \| 04:57 PM
Tomorrow In :30 Tue 18 Jun 13 \| 04:53 PM	Indictment for Soccer Mom/Pot Dealer Tue 18 Jun 13 \| 04:49 PM	FBR & Co. CEO: Higher Rates May Slow US Growth Tue 18 Jun 13 \| 04:40 PM	DuckDuckGo Search Engine Surges 33% Tue 18 Jun 13 \| 04:37 PM	Maintaining a Level Playing Field Tue 18 Jun 13 \| 04:30 PM

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Currency Carry Trade: CNBC Explains

Currency Carry Trade: CNBC Explains

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