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The Impact of GNMA Futures Trading on Cash Market Volatility
Author(s) -
Corgel John B.,
Gay Gerald D.
Publication year - 1984
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.00317
Subject(s) - atlanta , real estate , futures contract , economics , cash , finance , history , archaeology , metropolitan area
Excerpt] A general conclusion that can be drawn from theoretical analyses of spot market volatility when futures markets exist is best summarized by Turnovsky [1983, p. 1364] who states "under their (theoretical studies) respective assumptions, the futures market almost certainly stabilizes the “spot price." This suggests that trading in futures contracts may originate when cash markets experience considerable volatility. Indeed, futures trading on a variety of financial instruments was initiated shortly after periods of historically high interest rates.