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Similarly, in case of financial assets, the cost of carry includes interest and dividends.
Economics of Trading Futures under the Cost of Carry Model
One such market is single stock futures and, as OneChicago states, prices should equal their net cost of carry value.
In all cases, the perfectly hedged portfolio will earn the risk-less (net) cost of carry return.
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.