If there is a convenience yield,then the following is true of the forward price:
A)The forward price is higher than it would be if there were no convenience yield.
B)The bid price may be higher than the ask price on the forward.
C)The forward price does not depend on the convenience yield.
D)The forward price is lower than it would be with no convenience yield.

Question

Quizplus · Accepted Answer

The convenience yield is the benefit or value that an investor gets from holding a physical asset rather than a contract or derivative. This yield effectively reduces the cost of carrying the asset, which in turn lowers the forward price compared to a situation where there is no convenience yield.

If There Is a Convenience Yield,then the Following Is True