lease rate of futures - anyone?

r-1/T(future/spot)

deep2002 Wrote: ------------------------------------------------------- > r-1/T(future/spot) I’m sure you meant this: Lease rate = r-1/T*Ln(future/spot) = Formula 11 on CFAI Vol 5 Page 181 How about the effective annual lease rate: Least rate = (1+r)/[(future/spot)^(1/T)] = Formula 12 on CFAI Vol 5 Page 181 can anyone explain the difference between the two formulas? Thanks in advance!

Formula 11 : Using continunous compounded rate Formula 12 : Using discrete rate (future price = spot price x [(1+r)/(1+Lease rate)]^T