quiz of lease rate difference

Viceroy

lease rate is the difference of A and B ?

mar350

convenience yield (A) and storage costs (B)

nannan66

goodman2011 Wrote:
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> lease rate is the difference of A and B ?


Can you be any more cryptic?

It's storage costs minus convenience yield.

You can also interpret it as the rate used to force the spot price and futures price to be equal, if interest costs are known.

NO EXCUSES

mp3bu

Suppose the continuously compounded convenience yield is c, proportional to the value of the commodity. The commodity lender saves l - c by not physi- cally storing the commodity; hence, the commodity borrower pays d = c - l, compensating the lender for convenience yield less storage cost.
V5 184

A - B = convenience yield minus storage costs

Unforseen

pfcfaataf Wrote:
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> Suppose the continuously compounded convenience
> yield is c, proportional to the value of the
> commodity. The commodity lender saves l - c by not
> physi- cally storing the commodity; hence, the
> commodity borrower pays d = c - l, compensating
> the lender for convenience yield less storage
> cost.
> V5 184
>
> A - B = convenience yield minus storage costs

Yeah my bad brah, I had it reverse

NO EXCUSES

mcmc

The lease rate = commodity discount rate – growth rate

the lease payment is essentially a dividend

pennyless

sure, it is similar to div yield, the lease rate (or convenience yield)

good luck!