Cost of carry
Principles of Finance glossary · Valuation of Bonds & Stocks
Definition
The net cost of holding an asset over time, including financing, storage, and income yielded by the asset.
Cost of carry in plain English
Cost of carry is the true net cost of simply owning something and holding onto it for a while. Add up what it costs — the interest on money you tied up to buy it, plus storage or insurance — then subtract anything the asset pays you while you hold it, like dividends or rent. Think of holding a barrel of oil: you're paying to finance and store it, so that's real money leaking out each month; but holding a dividend stock partly pays you back. That leftover net figure drives the price gap between owning an asset today versus agreeing to buy it later.
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