A long-standing debate has been about selecting an appropriate auction format for various Treasury securities, a format that would be least subject to possible manipulation by individual traders or a cartel and also result in the highest possible revenues for the Treasury. A similar mechanism might be put into broader use. This article explains Treasury auctions in light of recent theoretical research and related empirical evidence. Empirically there seems to be no discernible difference between discriminatory and uniform-price auctions in terms of revenue to the Treasury. Bond prices tend to move together.
Stocks tend to go their own way.
This distinction requires completely different approaches to managing risks for these securities. For equities the emphasis is on reducing idiosyncratic risk through portfolio diversification. It presents empirical analysis showing that since 1970 the structure of these factors has not changed appreciably even though interest rate volatility has. The author provides a numerical example demonstrating that hedging based on the factor decomposition is superior to hedging based on the traditional method of Macaulay duration. Zsolt Becsi and Ping Wang 46 Securities trading has generated some of the most sensational scandals in the popular business press.