Hi guys, I was doing a mock exercise from the CFA website. I dont understand this problem and answer:
- Do convenience yields affect futures prices? The futures price formula is f0(T) = S0 (1+r)T + FV(CB,0,T), where FV(CB,0,T) represents the future value (FV) of the costs of storage minus the convenience yield. Thus the convenience yield decreases the futures price.
Why is it a decrease? In the formula we add it so shouldnt it increase the future price? Thx a lot