Drew And The Erie War

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Question 1 The company at the centre of The Erie war was the New York and Erie railroad company, operating in the railroad industry of Midwest and East coast between New York and Chicago. While Daniel Drew was the director and then treasurer of the Erie railroad his cunning and somewhat scrupulous ways of making money for himself and not entirely for the railroad attracted various interested investors looking to widen their grasp on the North East railroads of the United States. The most interested and prevalent investor was Commodore Vanderbilt, an owner of the New York Central, the Hudson River, and the Harlem railroads, Vanderbilt saw in the summer of 1867an opportunity to attempt to acquire the Erie for himself of which at the time Daniel…show more content…
The company issuing the bonds will have determined the volume of equity (most often shares) that can be collected (at a time specified by the bond holder) at the end of the bond. Drew would have wanted to take Erie bonds (convertible) from the Erie railroad as security as he knew that the bonds would not only have been a security for his loans to the company, which was the reason he got them in the first place. The ulterior motive to this was that Drew would be able to use these convertible bonds further down the track and convert them into Erie shares. Which just so happened the price for these shares were increasing in price by the day. Drew profited form the use of convertible bonds as he was able to slowly and very cunningly convert these bonds to Erie shares which he once again slowly would sell into the share market. Later Drew was able to use a court case battle to his outright advantage and drop 50000 shares of Erie stock onto the market. When Commodore Vanderbilt saw these shares on the market he foolishly pounced on them immediately, this inevitably was a failure as the quotation of the Erie fell enormously. Where Vanderbilt had paid a much higher price for the 50000 shares than what he would ever get from another buyer at that exact time. This enabled Daniel Drew to earn a hefty payment form Vanderbilt with a large profit made. Finally…show more content…
The companies ability to lend money will be strong for long term loans but weak for any short term loans. a risk that will arise for an Authorised Deposit-taking Institution (ADI) is that if they loan a short term loan to a company with maturity mismatch in their balance sheet they can run the risk that they will not get the money paid back in time even though the company could have net assets more than net liabilities due to the fact that short term loans will be required to be paid back with short term funds Question 3 Limit orders control the way in which shares will be bought or sold. Applying a safeguard towards the buyer or seller to make sure they get the outcome they desire. For instance, in the acquisition of shares on the share market, $20 per share may be the maximum price a buyer is willing to pay, a limit order will stipulate this detail to ensure no shares are purchased above this price. This will be the same for a seller, they will name a minimum price and a limit order will stipulate

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