Logo
Munich Personal RePEc Archive

Leveraging the British Railway Mania: Derivatives for the Individual Investor

Campbell, Gareth (2010): Leveraging the British Railway Mania: Derivatives for the Individual Investor.

Warning
There is a more recent version of this item available.
[thumbnail of MPRA_paper_21822.pdf]
Preview
PDF
MPRA_paper_21822.pdf

Download (1MB) | Preview

Abstract

During the British Railway Mania of the 1840s the promotion and construction of new railways increased dramatically. These new projects were generally financed by shares with uncalled capital, which allowed investors to make payments on an instalment basis over a period of several years. There is evidence that these assets can be regarded as futures or options, implying that investors were purchasing highly leveraged derivatives. The leverage embedded in these assets multiplied both the positive returns during the boom, and the negative returns during the downturn. It also affected the payment schedule for investors as little capital was required initially, but the subsequent ‘calls for capital’ resulted in deleveraging.

Available Versions of this Item

Atom RSS 1.0 RSS 2.0

Contact us: mpra@ub.uni-muenchen.de

This repository has been built using EPrints software.

MPRA is a RePEc service hosted by Logo of the University Library LMU Munich.