commodities

Learning objectives: Explain the key differences between commodities and financial assets. Define and apply commodity concepts such as storage costs, carry markets, lease rate, and convenience yield. Identify factors that impact prices on agricultural commodities, metals, energy, and weather...

In the case of a consumption commodity (e.g., corn, copper) we expected to observe contango: F(0) exceeds S(0). Contango implies (i) the cost of carry exceeds the convenience yield, and identically (ii) the risk-free rate exceeds the lease rate. We also might expect normal backwardation: F(0) is...

Hi David, Can you please explain how do we calculate forward price with storage costs when given as $ values and as % ? Between the two books I am really confused..perhaps extend this with other Cost of carry factors. Thanks in advance..

Hi David, With regard to gold futures, why do they have an increasing futures curve (contango)? When we have a positive lease rate, because would the +delta not decrease the forward price... So*exp((r-delta)T)? I am struggling to understand why the curve is upward sloping (I am a bit confused...

Hi, In one of your questions you say that "it is not uncommon for GARP to assume that we know" a few of the futures contract sizes, such that the size won't be stated in the question. Other than : A US T-bond future=$100,000 face value Gold futures = 100 troy ounces Silver futures = 5,000...

Hi, question 27, in 08 practice exam part III 27. Which of the following best describes what we would normally expect to see in a seasonal agricultural market like wheat? Assume “the harvest” is normal and not unusually big or unusually small. Now consider the following statements about...