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The Cost of Carry

  • The cost of carry, c, is the storage cost plus the interest costs less the income earned
  • For an investment asset F0 = S0ecT
  • For a consumption asset F0  ā‰¤ S0ecT
  • The convenience yield on the consumption asset, y, is defined so that: F0 = S0 e(cā€“y )T

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