What is a carry market?
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Similarly, what do you mean by cost of carry?
Cost of carry refers to costs associated with the carrying value of an investment. These costs can include financial costs, such as the interest costs on bonds, interest expenses on margin accounts, interest on loans used to make an investment, and any storage costs involved in holding a physical asset.
Beside above, how do you calculate carrying cost? Cost of carry includes the interest that is forfeited by holding the asset and costs of storage. Interest payments are generally calculated by multiplying the interest rate by the value of the underlying asset while dividend payments are a specific amount independent of the value of the underlying.
In this manner, what is the carry?
The carry of an asset is the return obtained from holding it (if positive), or the cost of holding it (if negative) (see also Cost of carry). For instance, commodities are usually negative carry assets, as they incur storage costs or may suffer from depreciation.
What is carry in the grain market?
Market carry is the premium distant month futures contracts offer to store or "carry" the grain for later sales. Forward contracting, selling futures, buying put options or speculating on stored grain can capture market carry. The grain must be stored.