Listen to a Business English Dialogue About Cost of carry
Lucy: Hey, Amelia! Have you heard about the concept of cost of carry in finance?
Amelia: Hi, Lucy! Yes, I have. It refers to the total cost of holding an asset over a period of time, including storage, insurance, and financing costs.
Lucy: That’s right. It’s an essential factor to consider when trading commodities or other assets.
Amelia: Definitely. The cost of carry can impact trading strategies and determine whether it’s profitable to hold an asset for a specific period.
Lucy: Exactly. Traders need to carefully analyze the cost of carry to make informed investment decisions.
Amelia: Are there any specific methods used to calculate the cost of carry?
Lucy: Yes, commonly used methods include subtracting the income earned from holding an asset from the total cost of holding it, or comparing the costs of different financing options.
Amelia: Thanks for clarifying, Lucy. It’s crucial to understand the cost of carry to manage investment portfolios effectively.
Lucy: Absolutely. It’s one of the key considerations for investors in various financial markets.
Amelia: I’ll make sure to keep that in mind. Thanks for the insightful conversation, Lucy!