convenience yield

Definition

The amount of benefit that is associated with physically owning a particular good, rather than owning a futures contract for that good. When a good is easy to come by, an investor doesn't have need to own the actual good at that time, and can buy or sell as he pleases. When there is a shortage of a particular good, however, it is better to already own the good than to have to purchase it during the shortage because it is likely to be at a higher price due to the demand. The convenience yield is the benefit derived in the second scenario.

Use convenience yield in a sentence

The convenience yield was a good benefit and I made sure it was worthwhile before I went ahead with it.

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The convenience yield was especially high for the rare asset that was only available in remote locations through the world.

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Toyota's convenience yield investors lost millions of dollars due to the nationwide recall on all 2009 Solaras for brake failure.

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