@David Harper CFA FRM
Hi, I am really confused about the formula of the lease rate that is given in the book (page 139) and the one that is given in the study notes (page 12, P1, T3). the reason for my confusion is when I followed the formula from the book, I got a different result compared to...
Can you explain these two terminologies w.r.t to commodities futures.
I am getting really confused when to add what to risk free rate.
Also is lease rate always positive .i.e. is it always added to the risk free rate?
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...
I have a couple of questions about the lease rate and cost of carry.
The first is: the lease rate seems to be defined in two very seperate ways. One is growth rate minus discount rate (lease markets) and the ther is convenience yield minus storage costs (carry markets). Maybe I...