Junior Equity

AAA

DEFINITION of 'Junior Equity'

Junior equity refers to equity that ranks lower than some other form of equity. It normally refers to the common stock in a company because it is subordinate to preferred stock. Common stock ranks behind preferred stock in its claim on company dividends because dividends on preferred stock must be paid before any dividends are paid to common stock.

INVESTOPEDIA EXPLAINS 'Junior Equity'

In the event of a bankruptcy, the holders of junior equity have the lowest claim on the company's assets. Junior equity, such as common stock, is subordinate to preferred stock, while preferred stock is subordinate to holders of bonds.

RELATED TERMS
  1. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
  2. Asset Valuation

    A method of assessing the worth of a company, real property, ...
  3. Common Stock

    A security that represents ownership in a corporation. Holders ...
  4. Equity

    1. A stock or any other security representing an ownership interest. ...
  5. Asset

    1. A resource with economic value that an individual, corporation ...
  6. Bulldog Market

    A nickname for the foreign bond market of the United Kingdom. ...
RELATED FAQS
  1. No results found.
Related Articles
  1. Bonds & Fixed Income

    A Primer On Preferred Stocks

    Offering both income and relative security, these uncommon shares may work for you.
  2. Investing Basics

    Knowing Your Rights As A Shareholder

    We delve into common stock owners' privileges and how to be vigilant in monitoring a company.
  3. Economics

    Afraid Of A New Financial Crisis?

    It may be time for the U.S. to adopt a model for financial companies that better deters risky financial behavior.
  4. Professionals

    What is a SWOT Analysis?

    SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. SWOT analysis is a management tool used to identify strategies for success. It may be used to guide individual thinking, group ...
  5. Trading Strategies

    What You Need To Know About Preferred Stock

    Curious about preferred shares? Here's what you should know about these bond-like instruments.
  6. Bonds & Fixed Income

    Evaluating A Company's Capital Structure

    Learn to use the composition of debt and equity to evaluate balance sheet strength.
  7. Investing Basics

    How Will Your Investment Make Money?

    Discover the basic types of investment income and which asset classes pay them.
  8. Insurance

    Liquidity And Toxicity: Will TARP Fix The Financial System?

    TARP is the government's attempt to forestall a deep, extended recession. Will it work?
  9. Investing Basics

    Goldman, the Muppets and the Mystery of ‘Pretty Fishy; Dodgy’ Holdings

    Georgetown finance professor James J. Angel along with other investors are battling Goldman Sachs over the takeover of a hotel company. It's a "Muppet revolt," he says.
  10. Investing

    Weighted Average Cost Of Capital (WACC)

    Weighted average cost of capital may be hard to calculate, but it's a solid way to measure investment quality

You May Also Like

Hot Definitions
  1. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  2. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  3. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  4. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  5. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  6. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
Trading Center