Respuesta :
Answer:
Explanation:
Sure, let's analyze how changes in the continuously compounded convenience yield could potentially affect the price of copper:
a) If the continuously compounded convenience yield increases, it suggests that the benefit or advantage of holding physical copper increases. This could happen due to factors such as increased demand for physical copper, improvements in storage or transportation, or changes in market conditions favoring the possession of physical copper.
With an increase in the convenience yield, the attractiveness of holding physical copper rises relative to other forms of investment or financial instruments based on copper. This increase in the perceived benefit of holding copper could potentially lead to an increase in the price of copper in the market.
b) If the continuously compounded convenience yield decreases, it indicates a reduction in the benefit of holding physical copper. Factors contributing to this could be reduced demand for physical copper, improved alternatives to holding physical copper, or changing market conditions making holding physical copper less advantageous.
A decrease in the convenience yield implies that the attractiveness of holding physical copper compared to other investments has diminished. Consequently, this reduction in perceived benefits might lead to a decrease in the price of copper in the market.
c) If the continuously compounded convenience yield remains constant, it implies that the benefit of holding physical copper stays unchanged compared to other financial instruments based on copper. This stability in the perceived benefit might not cause an immediate impact on the price of copper, assuming other market conditions remain constant.
d) If the continuously compounded convenience yield fluctuates, the price of copper could exhibit variability based on the changing perceived benefits of holding physical copper relative to other forms of investment. Fluctuations in the convenience yield might create fluctuations in the demand for physical copper, thereby influencing its market price.
In summary, changes in the continuously compounded convenience yield can impact the perceived advantages of holding physical copper, potentially influencing its market price. However, the relationship between the convenience yield and copper price is complex and depends on various market dynamics, so precise predictions require a detailed analysis of current market conditions.
