Virtually nonexistent a decade ago, the over-the-counter market for interest rate derivatives has grown at a phenomenal pace in recent years to become an increasingly important part of world securities markets. Although these instruments offer firms obvious benefits in managing their cash flows,...

The rapid growth of the market for interest rate swaps and other over-the-counter derivatives has spurred considerable controversy. Many observers have expressed concern that these instruments may increase risk and threaten the stability of financial markets. Current research into the uses of...

Virtually all financial innovation in the U.S. money market during the past 20 years has centered on interest rate derivatives, including futures and swaps. Furthermore, money market futures--especially futures contracts on Eurodollar time deposits--have been at the vanguard of the recent...

Options are contracts that give their owners the right, but not the obligation, to buy or sell a specified item at a set price on or before a specified date. An active over-the-counter market in stock options has existed in the United States for about a century. Options began to be traded on...

Not long ago futures trading was limited to contracts for agricultural and other commodities. Trading in futures contracts for financial instruments began in the early 1970s, after almost a decade of accelerating inflation exposed market participants to unprecedented levels of exchange rate and...