Answer: storage costs of the underlying asset.

## Explanation The forward price formula is given by: \[ F_0 = S_0 \times e^{(r + u - y)T} \] Where: - \( F_0 \) = forward price - \( S_0 \) = spot price - \( r \) = risk-free interest rate - \( u \) = storage costs (as a percentage) - \( y \) = convenience yield (as a percentage) - \( T \) = time to maturity From this formula, we can see: 1. **Storage costs (u)**: An increase in storage costs will increase the forward price because higher storage costs make holding the physical asset more expensive, which increases the cost of carry and thus the forward price. 2. **Interest earned on the underlying asset**: This is not a standard term in forward pricing. If this refers to the convenience yield or income from the asset, it would actually decrease the forward price. 3. **Convenience yield (y)**: An increase in convenience yield will decrease the forward price because convenience yield represents the benefit of holding the physical asset rather than the forward contract. Therefore, only an increase in storage costs will increase the forward price. **Key Concept**: The forward price increases with higher storage costs and risk-free rates, but decreases with higher convenience yields.

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