Module Discussion

Explain carefully the meaning of the terms convenience yield and cost of carry. What is therelationship between futures price, spot price, convenience yield, and cost of carry?

 Specifications:

Word count for initial discussion response – a minimum of 250 words;

Use relevant references;

Reference

A.    Hull, J. (2012). Options, futures, and other derivatives (8th ed.). Boston, MA: Prentice Hall.

B.    Brealey, R A, Myers, S C and Marcus, A J,(2008) Fundamentals of Corporate Finance, 6th edition, McGraw Hill