Spring 2010

Ameritrade - Harvard Case Study

Background:

Ameritrade Holding Corporation is securities brokerage services and technology-based financial services firm from the United States. The company was founded in 1971 and is headquartered in Omaha, Nebraska. “Ameritrade MERITRADE for self-directed retail investors; TD AMERITRADE Institutional that provides brokerage and custody services; trading platforms that enables research and analysis; a suite of education products and services for stock, option, foreign exchange, futures, mutual fund, and fixed-income investors; Amerivest, an online advisory service that develops portfolios of exchange-traded funds to help long-term investors pursue their …show more content…

How will this huge shift in commission prices affect the bottom line if Ameritrade is not able to increase its volume the required amount to break even? These factors should be considered when risk is being assessed. When looking at the annual income statement for Ameritrade it is clear that 90% of its revenues come from commission and interest income. Looking at exhibit number four, we find that the following firms are a close match to Ameritrade in their brokerage revenue percentages. These are the firms we should look to when comparing risk assessments.

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| |Debt/Value | |Debt/Capital | | |
| |(Market Values) | |(Book Values) | | |
|Firm Name (Industry) |Current |Average | |Current |Average | |Brokerage |
| | |1992-1996 | | |1992-1996