Exchange Currency

convenience yield

The amount of benefit that is associated with physically owning a particular good, rather than owning a futures contract for that good. When a good is easy to come by, an investor doesn't have need to own the actual good at that time, and can buy or sell as he pleases. When there is a shortage of a particular good, however, it is better to already own the good than to have to purchase it during the shortage because it is likely to be at a higher price due to the demand. The convenience yield is the benefit derived in the second scenario.

Related information about convenience yield:
  1. Convenience yield - Wikipedia, the free encyclopedia
    A convenience yield is an adjustment to the cost of carry in the non-arbitrage pricing formula for forward prices in markets with trading constraints. Let F_{t,T} ...
     
  2. Convenience Yield Definition | Investopedia
    The benefit or premium associated with holding an underlying product or physical good, rather than the contract or derivative product.
     
  3. Spot Convenience Yield Models for the Energy Markets
    involves convenience yield as a factor, our goal being to document the shortcom- ... introduction of the convenience yield is usually justified by the desire to ...
     
  4. What is convenience yield? definition and meaning
    Definition of convenience yield: The amount of benefit that is associated with physically owning a particular good, rather than owning a futures contract for that ...
     
  5. The theory of storage and the convenience yield - PIMS
    2008. Summer School - UBC. 2. The theory of storage and the normal backwardation theory explain the relationship between the spot and futures prices in ...
     
  6. Convenience yield — helping to shape oil's forward curve
    Apr 29, 2010 ... The shape of the forward curve is an important indicator of the state of the oil market, sloping downwards when the market is tight and rising ...
     
  7. Convenience yield: Definition from Answers.com
    Convenience Yield The benefit or premium associated with holding an underlying product or physical good, rather than the contract or derivative product .
     
  8. 4. The Convenience Yield and Risk Premia of Inventory
    related to the convenience yield and they forecast significant futures returns. ... “ anticipated” mean reversion and the spot price-convenience yield correlation ...