The Additional Return Earned by Holding a Commodity That Is

question 43

Multiple Choice

The additional return earned by holding a commodity that is in short supply or a nonpecuniary gain from an asset is referred to as

• A)the negative cost of carry
• B)the convenience yield
• C)cash-flow free gains
• D)gains on the underlying
• E)none of the above

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Definitions:

Financial Advantage

The benefit gained when financial resources are managed to maximize efficiency and profitability.

Contribution Margin

The margin between the income from sales and the costs that vary, illustrating the amount of revenue available for offsetting fixed expenses and yielding a profit.

Annual Fixed Costs

Costs that do not vary with the level of production or sales over the year, such as rent, salaries, and insurance.

Financial Advantage

Any benefit or gain, in financial terms, that improves the economic situation of an entity or individual.