- cost of carry
- (or carry) For physical commodities such as grains and metals, the cost of storage space, insurance, and finance charges incurred by holding a physical commodity. In interest rate futures markets, it refers to the differential between the yield on a cash instrument and the cost of funds necessary to buy the instrument. Chicago Board of Trade glossary————The cost of financing an asset. If the cost of carry is smaller than the interest received from the asset by the investor, the investor has a positive carry. Conversely, if the cost of carry is larger than the interest received from the asset by the investor, the investor has a negative carry. American Banker Glossary————Out-of-pocket costs incurred while an investor has an investment position. Examples include interest on long positions in margin account, dividend lost on short margin positions, and incidental expenses. Related: net financing cost. Bloomberg Financial Dictionary————The costs incurred in buying an asset today and carrying it through to the delivery day of a future. Such costs may include finance costs, insurance, storage etc. and will be reduced by the benefits of holding certain assets such as dividends and coupons. Dresdner Kleinwort Wasserstein financial glossary
* * *
The difference between the interest generated on a cash instrument such as a bond or a Treasury bill and the cost of funds to finance the position.► See also Positive Carry, Negative Carry.
Financial and business terms. 2012.