cost of carry


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Cost of carry

Out-of-pocket costs incurred while an investor has an investment position. Examples include interest on long positions in margin account, dividend lost on short margin positions, and incidental expenses. Related: Net financing cost.

Cost of Carry

The cost of storing a commodity over a period of time. It includes incidental costs, insurance coverage, and the physical cost of storage. It does not include depreciation, if any. The carrying charge is incorporated in the price of a commodity on the futures market. See also: Carrying costs.

cost of carry

Direct costs paid by an investor to maintain a security position. For example, an individual purchasing securities on margin must pay interest expenses on borrowed funds. Likewise, an investor selling stock short is responsible for making dividend payments to the buyer. Also called carrying charges.
References in periodicals archive ?
Similarly, in case of financial assets, the cost of carry includes interest and dividends.
Tt] denote the portfolio's profit, the change in the spot price, the spot asset cost of carry, and the change in the maturity-date-T futures contract price, respectively, from time t to t+1.
Despite the similarities noted above, the cost of carry and ECM disequilibrium interpretations are incompatible.
However, reinterpret the spot price as the spot price inclusive of the cost of carry to the futures contract maturity in Equation (4) and denote this version as the MECM.
The cost of carry is the interest on the spot price compounded for the period of the hedge at the yield-to-maturity of the approximately two week-to-maturity T-bill (reported in the Wall Street Journal).
If, in those circumstances, there are large short positions in the market, it is likely that one or both of the following will occur: First, the price of the securities in question will rise relative to close substitute securities, or, second, the financing cost of the securities in the repurchase agreement (RP) market will drop, thereby providing the owners of those securities with a very favorable cost of carry.
Sellers of every kind of property -- from top-flight mixed use property to operating hotels and development land - are finding auctions are the most efficient way to move property while minimizing the cost of carry and maximizing return.
While this has very positive implications for Citicorp longer term, the workout of problem real estate loans, and the associated credit- related expenses including cost of carry, write-downs and other expenses, combined with Duff & Phelps expectations of a weak business environment in 1992 will negatively affect profitability and internal generation of capital.
The study cites decreased elapsed time between locking/funding loans, compressed funding cycles, improved secondary market pricing and reduced cost of carry.
The strength of the primary market for speculative grade bonds is certainly working in favor of high yield companies by enabling them to reduce the cost of carry on high levels of debt while waiting for revenue and cash flow to rebound.
In selecting LYONs, we decided to capitalize on the strong demand in the convertibles market as an opportunistic borrowing and leverage our strong financial position with relatively inexpensive capital at attractive terms while maintaining conservative financial ratios and a negative cost of carry.
We decided to capitalize on the strong demand in the convertibles market as an opportunistic borrowing which provides an opportunity to leverage our financial position with relatively inexpensive capital at attractive terms while maintaining conservative financial ratios and a negative cost of carry.