Article – 2: Commodity forwards and Futures. (Robert McDonald)

Almost all the following concepts that are applicable for financial assets, they are all applicable for commodities.

Let us draw the table as below to understand:

Discussion point	Financial assets	Real assets like commodities
Formula for finding future value	S0ert	S0ert
Dividends in Financial assets (Dividend in any form is an income)	Yes, we receive	Possible only some assets like mortgages (rental income) in commodities, generally no dividends are received by holding the assets.
Storage costs (Storage cost is an expense)	Generally no, But in certain cases it is there. For example, if we hold 100 Bank deposit receipts or forms, we may prefer to keep them in bank locker	In case of commodities and real assets, the holder of the asset has to spend storage cost.
Insurance cost	Generally no such costs are incurred in financial products.	The holder of the asset needs to spend for insurance cost.
S0ertè It is very important to understand this formula. If I am holding an asset, it means I have already invested some amount on the asset. In that case, my investment has time value. My investment can be in the form of a financial asset or investment in the form of commodity, the investment value needs to grow. Therefore, the formula is an expression for time value of money of the investment amount.