The additional return earned by holding a commodity that is in short supply or a nonpecuniary gain from an asset is referred to as
A)the negative cost of carry
B)the convenience yield
C)cash-flow free gains
D)gains on the underlying
E)none of the above

Question

Quizplus · Accepted Answer

The additional return earned by holding a commodity that is in short supply or a nonpecuniary gain from an asset is referred to as the convenience yield. This is because the commodity becomes more valuable due to the benefits and conveniences that its possession provides to its holder, such as assured supply availability during shortages or the ability to use it for production or processing. The other choices are not correct definitions for this concept.

The Additional Return Earned by Holding a Commodity That Is