hopetopass

[hopetopass]

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It’s like this:

Remember, the Factors for the Futures Price are “+ Risk Free Rate “- Lease Rate”.

Lease Rate = “Storage – Convenience”.

If Convenience is 0, then Lease rate is OVERSTATED.

In the Formula, the Lease rate is negative, thus the overstatement makes it (the negative) larger reducing or understating the Forward Price.

[hopetopass]

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It’s easy and straightforward when you take it outside of the pressure, but completely different when you’re in the room taking it. The way CFAI asks the questions will get to you and make you lose your confidence (especially under pressure).

So don’t equate what you see on what they release to the actual experience. Your brain will literally go the opposite that you thought it would.

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