Carrying Cost is the total cost of holding or maintaining an asset or investment over a period of time.
Carrying Cost (also called Cost of Carry) includes all expenses incurred while holding an asset, such as storage, insurance, interest, and maintenance costs.
It is commonly used in inventory management, investments, and derivatives pricing (like futures contracts).
In derivatives, carrying cost affects futures prices, where:
👉 Futures Price = Spot Price + Carrying Cost
"If a company stores goods worth ₹10 lakh and spends ₹50,000 annually on storage, insurance, and interest, this ₹50,000 is the carrying cost."