Skip to content

NISM Certifications · NISM-Series-XV: Research Analyst · Fundamental Analysis of Commodities

In commodity markets, the term 'convenience yield' is best described as:

Convenience yield is the benefit of holding the physical commodity itself, such as keeping production uninterrupted during shortages, which a holder of only a futures contract does not get. It is not margin interest, a calendar spread or a storage fee.

  1. AThe benefit that accrues to a holder of the physical commodity from having it available, such as avoiding supply disruptionsCorrect
  2. BThe interest earned on margin money deposited with the exchange
  3. CThe discount at which a futures contract trades to its expiry-month contract
  4. DThe fee charged by a warehouse for storing the commodity

Explanation

Convenience yield is the non-monetary benefit of holding the physical commodity rather than a futures position, for example keeping a production process running during shortages. Margin interest, calendar spreads and warehouse fees are different concepts.

Did you get it right without looking?

One question tells you little. A timed set on Fundamental Analysis of Commodities shows your real accuracy, how long you take and where you lose marks.

Practise Fundamental Analysis of CommoditiesFree diagnostic mock

More Fundamental Analysis of Commodities questions