Explain Commodity lease rates investor, understand, especially, benefit

AnalystForum

I understand the commodity lease rates is convenience yield - storage costs

Lease rate - the rate of return an investor requires to buy the commodity and then lend the commodity

convenience yield - holding the commodity for non monetary return

If I think lease rate from a perspective, he buys the car and leases it out and the lease rate makes sense

I do not understand how lease rate is convenience yield - storage costs especially if convenience yield is non monetary benefit

Any commodity gurus explain in plain english

I still don't understand why the upper bound depends on the storage costs and not convenience yield in the no arbitrage formula



Edited 1 time(s). Last edit at Wednesday, May 25, 2011 at 10:08AM by drk.