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:
- 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} ...
- Convenience Yield Definition | Investopedia
The benefit or premium associated with holding an underlying product or physical good, rather than the contract or derivative product.
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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 ...
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2008. Summer School - UBC. 2. The theory of storage and the normal backwardation theory explain the relationship between the spot and futures prices in ...
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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 ...
- 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 .
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related to the convenience yield and they forecast significant futures returns. ... “ anticipated” mean reversion and the spot price-convenience yield correlation ...