Listen to a Business English Dialogue About Positive carry
Faith: Hi Sean, have you heard of “positive carry” in business and finance?
Sean: Yes, Faith. It refers to a situation where the income generated from an investment exceeds the cost of financing that investment.
Faith: Right. So, it’s like earning more from an investment than what it costs to maintain it?
Sean: Exactly. Positive carry is often sought after by investors because it indicates a profitable investment opportunity.
Faith: Can you give an example of positive carry?
Sean: Sure, Faith. For instance, if an investor borrows money at a low interest rate and invests it in a higher-yielding asset, such as a bond or real estate, the income generated from the investment would exceed the borrowing costs, resulting in positive carry.
Faith: Are there any risks associated with positive carry?
Sean: Yes, Faith. One risk is that the income generated from the investment may not always exceed the financing costs, especially if market conditions change or if the investment performs poorly.
Faith: How do investors assess opportunities for positive carry?
Sean: Well, Faith, investors typically compare the expected income from an investment to the cost of financing it, taking into account factors like interest rates, yields, and potential risks.
Faith: Can positive carry be achieved in different types of investments?
Sean: Yes, Faith. Positive carry opportunities can exist in various asset classes, including stocks, bonds, real estate, and currencies, depending on market conditions and investor preferences.
Faith: What strategies can investors use to maximize positive carry?
Sean: Faith, investors may use leverage, arbitrage opportunities, or interest rate differentials to enhance positive carry and increase their returns on investment.
Faith: Are there any tax implications associated with positive carry?
Sean: Yes, Faith. Investors should be aware of tax implications, such as capital gains taxes or interest income taxes, when considering investments that generate positive carry.
Faith: Thanks for explaining, Sean. I have a better understanding of what positive carry is now.
Sean: No problem, Faith. If you have any more questions about finance or business, feel free to ask anytime.