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. Equity

    1. A stock or any other security representing an ownership interest. ...
  2. Common Stock

    A security that represents ownership in a corporation. Holders ...
  3. Asset

    1. A resource with economic value that an individual, corporation ...
  4. Asset Valuation

    A method of assessing the worth of a company, real property, ...
  5. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
  6. Bulldog Market

    A nickname for the foreign bond market of the United Kingdom. ...
Related Articles
  1. Bonds & Fixed Income

    A Primer On Preferred Stocks

  2. Investing Basics

    Knowing Your Rights As A Shareholder

  3. Taxes

    How are preferred stock dividends taxed?

  4. Curious about preferred shares? Here's what you should know about these bond-like instruments.
    Trading Strategies

    What You Need To Know About Preferred ...

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center