Cost of carry and Foreign exchange: Difference between pages

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imported>Doug Williamson
(Add quote. Source: ACT blog https://www.treasurers.org/weekly-roundup-29-april-updates-treasury-matters-relating-coronavirus)
 
imported>Doug Williamson
(Note abbreviations expressly.)
 
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Cost of carry means the total net costs of holding an investment asset or market position.
#A transaction for the exchange of one currency for another.
#Any currency other than the domestic currency.
#The market for foreign exchange transactions.


Cost of carry includes financing costs.


 
Often abbreviated as FX or FOREX.
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.
 
 
:<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.''




== See also ==
== See also ==
* [[Backwardation]]
* [[CertFMM]]
* [[Contango]]
* [[Currency forward contract]]
* [[Revolving credit facility]] (RCF)
* [[Dealer]]
* [[Economic foreign exchange exposure]]
* [[Exchange rate]]
* [[Foreign currency option]]
* [[Foreign exchange portal]]
* [[Foreign exchange rate]]
* [[Foreign exchange risk]]
* [[Foreign exchange settlement risk]]
* [[Foreign exchange swap]]
* [[Foreign exchange trader]]
* [[Forward foreign exchange rate]]
* [[Forward points]]
* [[FXJSC]]
* [[IAS 21]]
* [[Interest rate parity]]
* [[Inversion]]
* [[Quoted currency]]
* [[MCT]]
* [[Spot rate]]
* [[Transfer risk]]


[[Category:Cash_management]]
[[Category:Manage_risks]]
[[Category:Financial_products_and_markets]]
[[Category:Liquidity_management]]

Revision as of 21:38, 27 April 2016

  1. A transaction for the exchange of one currency for another.
  2. Any currency other than the domestic currency.
  3. The market for foreign exchange transactions.


Often abbreviated as FX or FOREX.


See also

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