In the cost of carry model, the inclusion of storage costs will increase the futures price.

Name: In the cost of carry model, the inclusion of storage costs will increase the futures price.
Brand: Quizplus
Rating: 4.8 (34 reviews)

Question

Quizplus · Accepted Answer

The cost of carry model takes into account the costs of holding and financing the underlying asset until the delivery date. Storage costs are a part of this and therefore, their inclusion will increase the overall cost of carrying the asset. This, in turn, will lead to an increase in the futures price.

In the Cost of Carry Model, the Inclusion of Storage