[...]Derivatives contracts are especially efficient vehiclesfor unbundling the price risks embodied in assets andliabilities.2 The contracts allow users to trade away therisks they do not wish to be exposed to while retainingother risk exposures. For example, in a financing relationshipbetween a...

In April 1995, central banks in twenty-six countries conducted a global survey of the financial derivatives markets' size and structure. The authors' analysis of the survey results suggests that at the time of the survey, dealers in the aggregate assumed only small exposures to price risks in...

This paper examines how risk in trading activity can affect the volatility of asset prices. We look for this relationship in the behavior of interest rate swap spreads and in the volume and interest rates of repurchase contracts. Specifically, we focus on convergence trading, in which...