Case Study Of The Erie Railroad Company
i) The Erie Railroad Company was at the center of The Erie War. It operates the railroad transportation business within Buffalo, Chicago and New York City. As it connects cities within the southern countries and Lake Erie thus railroad transportation is the main industry the company operates.
ii) Controlling ownership interest is defined as an individual who posses at least 50% of the company’s share. They can manage and control the company, for example choosing managers and assigning dividends.
Vanderbilt tried to gain controlling ownership interest in the Erie Railroad Company.
iii) Convertible bonds can be converted into a company’s share, equity or stock in the future. They are more advantageous and beneficial for investors …show more content…
As stated above, he was able to earn a profit from the difference in spread. In addition, he was able prevent Vanderbilt from taking over his company by converting bonds into stocks. As it introduces more stocks into the company, hence wider percentage ranges. Nevertheless Vanderbilt was unable to gain ownership of the company although he bought more stocks, as he does not own enough percentage of the company. Therefore, Drew not only earn a few million, he was also able to sustain his authority in the …show more content…
However, the liabilities and assets of an individual or company are different to an ADI. For example, a loan is a liability for an individual or company but an asset for ADIs. Maturity mismatch introduces risks such as liquidity risk and funding risk. Liquidity risk is the possibility of an ADI being unable to comply its financial obligation such as not being able to perform any withdrawal. Furthermore, funding risk is associated to maturity mismatch. This occurs when an ADI does not hold sufficient funds to cover its loan, such as lack of availability of funds.
Limit order is defined as a specific instruction given by the investors to a broker describing how a specific trade should be executed, investors usually aimed to buy or sell at a specific price or better. Hence, it assurances a particular price.
Nonetheless, market order is defined as an instruction to buy or sell an investment at its best available price. Thus, it guarantees an