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Answer: d) The lease rate is given by: commodity growth rate $(g)$ - discount rate $(\alpha)$
The incorrect statement is **D**. In McDonald’s framework, the lease rate plays a role similar to a dividend yield or convenience yield in forward pricing, and it can often be inferred from the forward curve. However, it is not defined as the commodity growth rate minus the discount rate. The other statements are consistent with the lease-rate interpretation in commodity markets.
Author: Manit Arora
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Question 187.3. According to McDonald, EACH of the following statements is true about the commodity lease rate EXCEPT:
A
a) In a carry market, the lease rate should equal the negative of the storage cost
B
b) In a lease market, the lease rate (delta) informs the forward price in a way similar to a dividend does a financial commodity:
C
c) We should be able to infer the lease rate of gold from the gold forward curve
D
d) The lease rate is given by: commodity growth rate - discount rate
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