Cost of carry: Difference between revisions
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imported>Doug Williamson (Remove surplus link.) |
imported>Doug Williamson (Add quote. Source: ACT blog https://www.treasurers.org/weekly-roundup-29-april-updates-treasury-matters-relating-coronavirus) |
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Cost of carry means the total net costs of holding an investment asset or market position. | |||
Cost of carry includes financing costs. | Cost of carry includes financing costs. | ||
For physical assets, cost of carry may include storage and insurance costs. | For physical assets, cost of carry may include storage and insurance costs. | ||
Cost of carry is usually calculated and stated after offsetting any income generated by the asset. | Cost of carry is usually calculated and stated after offsetting any income generated by the asset. | ||
:<span style="color:#4B0082">'''''Cost of carry can be a price worth paying'''''</span> | |||
:Update on treasury matters relating to the coronavirus... | |||
:One treasurer had resisted pressure from the board to draw down on their RCF by drawing down on only 20% of the facility as a test case and then subsequently repaying the loan. They felt the cost of carry was unnecessary. | |||
:Another treasurer felt the cost of carry, by drawing down on the RCF and then depositing the proceeds, was a cost-effective insurance policy. | |||
:''Association of Corporate Treasurers, 28 April 2020, Naresh Aggarwal, Associate Director Policy & Technical.'' | |||
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* [[Backwardation]] | * [[Backwardation]] | ||
* [[Contango]] | * [[Contango]] | ||
* [[Revolving credit facility]] (RCF) | |||
[[Category:Cash_management]] | |||
[[Category:Financial_products_and_markets]] | |||
[[Category:Liquidity_management]] | |||
Revision as of 16:15, 16 May 2020
Cost of carry means the total net costs of holding an investment asset or market position.
Cost of carry includes financing costs.
For physical assets, cost of carry may include storage and insurance costs.
Cost of carry is usually calculated and stated after offsetting any income generated by the asset.
- Cost of carry can be a price worth paying
- Update on treasury matters relating to the coronavirus...
- One treasurer had resisted pressure from the board to draw down on their RCF by drawing down on only 20% of the facility as a test case and then subsequently repaying the loan. They felt the cost of carry was unnecessary.
- Another treasurer felt the cost of carry, by drawing down on the RCF and then depositing the proceeds, was a cost-effective insurance policy.
- Association of Corporate Treasurers, 28 April 2020, Naresh Aggarwal, Associate Director Policy & Technical.
