Junior Issue

AAA

DEFINITION of 'Junior Issue'

A corporate security that ranks lower in claim to another corporate security in terms of dividends, interest or principal repayment if the company goes out of business. Junior issues can be in the form of debt or equity. A junior issue is the opposite of a senior issue, which has priority if a company liquidates.

INVESTOPEDIA EXPLAINS 'Junior Issue'

Specific types of securities are not always inherently junior are senior; they are junior or senior relative to other types of securities. The absolute priority rule, also called liquidation preference, dictates the order in which shareholders and creditors must be repaid when a company goes under. For example, if there are preferred shareholders, they must be repaid before common shareholders - thus, the common stock would be considered the junior issue.

RELATED TERMS
  1. Liquidation

    1. When a business or firm is terminated or bankrupt, its assets ...
  2. Unsubordinated Debt

    A loan or security that ranks above other loans or securities ...
  3. Dividend

    1. A distribution of a portion of a company's earnings, decided ...
  4. Subordinated Debt

    A loan (or security) that ranks below other loans (or securities) ...
  5. Senior Security

    A security that ranks above another security in the event of ...
  6. Issue

    1. The process of offering securities as an attempt to raise ...
Related Articles
  1. Investing Basics

    Stock Basics Tutorial

    If you're new to the stock market and want the basics, this is the tutorial 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. Investing Basics

    What Owning A Stock Actually Means

    Think owning a stock gives you special privileges with the company? Think again.
  4. Taxes

    How are preferred stock dividends taxed?

    Discover the intriguing debt and equity characteristics of preferred stock, and learn about how preferred stock dividends are taxed.
  5. Curious about preferred shares? Here's what you should know about these bond-like instruments.
    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. Investing

    What is the difference between preferred stock and common stock?

    Preferred and common stocks are different in two key aspects. First, preferred stockholders have a greater claim to a company's assets and earnings. This is true during the good times when the ...
  7. Investing

    Why do some preferred stocks have a higher yield than common stocks?

    Before we answer this question, let's just take a quick review of what a stock's yield is actually measuring.The yield is calculated by taking the stock's annual expected dividend and then dividing ...
  8. Bonds & Fixed Income

    Evaluating A Company's Capital Structure

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

    How Will Your Investment Make Money?

    Discover the basic types of investment income and which asset classes pay them.
  10. 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?

You May Also Like

Hot Definitions
  1. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  2. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  3. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  4. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  5. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  6. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
Trading Center