What Is a Holding Cost?
Holding cost is the difference between the cost of interest that a financier needs to pay for the purchase of an underlying object (ie, a financial bond) in the futures market and the gains that it can obtain during the time it owns a financial futures contract. That is, the net cost that investors need to pay during this time. For financial futures, holding costs mainly include: risk costs, interest (the cost of holding funds due to the purchase of financial futures contracts), insurance premiums and interest rates. Among them, changes in interest rates have the greatest impact on holding costs. [1]
Carrying cost
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- Chinese name
- Carrying cost
- Foreign name
- Holding Cost
- Including
- Storage, handling, damage, depreciation
- Classification
- Proper noun
- Means
- Is r
- Holding cost is the difference between the cost of interest that a financier needs to pay for the purchase of an underlying object (ie, a financial bond) in the futures market and the gains that it can obtain during the time it owns a financial futures contract. That is, the net cost that investors need to pay during this time. For financial futures, holding costs mainly include: risk costs, interest (the cost of holding funds due to the purchase of financial futures contracts), insurance premiums and interest rates. Among them, changes in interest rates have the greatest impact on holding costs. [1]
- (Holding Cost) includes costs of storage, handling, damage, depreciation, and insurance.
- Cost of carry refers to the cost of storage plus the interest paid on financing the purchase of an asset, minus the proceeds from that asset. For stocks that do not pay dividends, the holding cost is r because there is no storage cost and no return; for a stock index, the holding cost is rq because the return on assets is q; The ratio of cost to price is u, then the holding cost is r + u.