NISM Certifications · NISM-Series-XV: Research Analyst · Fundamental Analysis of Commodities
A gold futures contract is trading at ₹62,000 per 10 grams for a 3-month maturity. Spot gold is ₹60,000 per 10 grams. Ignoring any convenience yield, the cost-of-carry model implies the 3-month carrying cost (as a percentage of spot) is approximately:
The carrying cost is the futures premium over spot divided by spot. The premium is ₹2,000 on a spot of ₹60,000, giving about 3.33% for the three months. Using the futures price as the base would wrongly give 3.23%.
- A3.33%Correct
- B3.23%
- C2.00%
- D6.45%
Explanation
Futures minus spot = 62,000 - 60,000 = ₹2,000. As a percentage of spot: 2,000/60,000 = 3.33%. Dividing by the futures price gives 3.23%, which uses the wrong base. Annualising or other bases give the remaining values.
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