Skip to main content

Derivative Mechanics: The CMO

(PDF PDF icon)

The current interest in financial derivatives sometimes appears to be driven by the same tastes that support police and doctor dramas on television: many crashes and a lot of blood. Though undeniably exciting, such shows do not teach you how to drive safely or how to administer first aid. Likewise, a concentration on the blowups of financial derivatives slights the more basic information needed for policy decisions or corporate risk management.

The current interest in financial derivatives sometimes appears to be driven by the same tastes that support police and doctor dramas on television: many crashes and a lot of blood. Though undeniably exciting, such shows do not teach you how to drive safely or how to administer first aid. Likewise, a concentration on the blowups of financial derivatives slights the more basic information needed for policy decisions or corporate risk management.


Suggested citation: Haubrich, Joseph G., 1995. "Derivative Mechanics: The CMO," Federal Reserve Bank of Cleveland, Economic Commentary, 09.01.1995.

Upcoming EventsSEE ALL