Respuesta :
An advantage of retaining an underlying asset rather than the corresponding derivative instrument or contract is known as a convenience yield. the advantages of owning the item that are not monetary.
The term "convenience yield" used to describe holding the underlying asset of a derivative typically alludes to non-financial advantages of holding an asset, such as being able to sell an overpriced asset that is challenging to sell short. The term "convenience yield" excludes financial benefits like interest and dividend payments. The cost of carrying an asset less any financial and non-financial benefits is known as the net cost of carry. The convenience yield refers to the advantages of retaining the physical asset.
Benefits of Convenience yield are as follows –
1) Inflows may include intangibles as well
2) Intangible inflows are worth that market players sense simply from owning an asset.
The formulae below depict the Convenience yield -
Futures price = Spot price (1+Rf) + Storage Costs – Convenience Yield
To know more about Convenience yield then refer: brainly.com/question/15683175
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