I refer to CFAI SS13 Reading 39 (pg187)Questions 2 parts B and C and Question 3. In Q 2, B and C, Cash and Carry Arbitrage is calculated in the solutions NOT taking into account the borrowing costs. However, in Q3, Cash and Carry is calculated INCLUDING borrow purchasing costs. In the examples in the reading, the borrow purchasing costs are used. However, a real Cash and Carry, I believe, does not inlcude borrowing costs. Could someone PLEASE clarify this for me. Many thanks
I think there should be an interest component for the return on cash… I get paid today to carry and deliver a commodity in the future so I can bank my check today for some interest.