Cost Of Tender

AAA

DEFINITION of 'Cost Of Tender'

The total charges associated with the delivery and certification of commodities underlying a futures contract. The cost of tender represents the total costs related to taking physical delivery of a commodity. These costs are assessed only if the futures contract holder wishes to receive the commodity rather than close the position prior to expiration.

INVESTOPEDIA EXPLAINS 'Cost Of Tender'

The cost of tender is essentially the cost of doing business. Any costs associated with the actual physical delivery of the commodity comprise the cost of tender. For example, if an investor is long corn (owns a futures contract on corn), the seller must deliver the corn to the contract holder when the contract expires (unless the contract holder closes the position prior to expiration). The holder must compensate the seller for the cost of tender, including transportation, carrying costs and any other expenses that are associated with the delivery.

RELATED TERMS
  1. Cash Commodity

    In futures trading, the cash commodity is delivered for payments. ...
  2. Certificated Stock

    The stock of a commodity that has been inspected by qualified ...
  3. Approved Delivery Facility

    A facility authorized by an exchange to be used as a location ...
  4. Contract Unit

    The actual amount of the underlying asset represented by a single ...
  5. Full Charge

    The event in which the price of a futures contract covers all ...
  6. Futures Contract

    A contractual agreement, generally made on the trading floor ...
Related Articles
  1. Commodities: The Portfolio Hedge
    Active Trading

    Commodities: The Portfolio Hedge

  2. Taking A Look Behind Hedge Funds
    Mutual Funds & ETFs

    Taking A Look Behind Hedge Funds

  3. Interpreting Volume For The Futures ...
    Options & Futures

    Interpreting Volume For The Futures ...

  4. How Companies Use Derivatives To Hedge ...
    Active Trading

    How Companies Use Derivatives To Hedge ...

comments powered by Disqus
Hot Definitions
  1. 80-10-10 Mortgage

    A mortgage transaction in which a first and second mortgage are simultaneously originated. The first position lien has an ...
  2. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  3. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  4. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  5. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center