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. Senior Issue

    An issue of bonds, preferred stock or other securities that represents ...
  2. Absolute Priority

    A rule that stipulates the order of payment - creditors before ...
  3. Junior Security

    A security that ranks lower than other securities in regards ...
  4. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
  5. Liquidation

    1. When a business or firm is terminated or bankrupt, its assets ...
  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. Bonds & Fixed Income

    What are the benefits and drawbacks of owning preferred stock and common stock?

    Owning a share of a company can be accomplished through the purchase of common or preferred stock, but there are benefits and drawbacks for each option.
  5. Investing Basics

    What is common stock and preferred stock?

    Learn about the differences between common and preferred shares. Explore situations where preferred shares have more favorable rights of ownership.
  6. Bonds & Fixed Income

    How does preferred stock differ from company issued bonds?

    Discover the primary differences between preferred stock and corporate bonds, two income-generating investment vehicles issued by certain companies.
  7. Fundamental Analysis

    What are the components of shareholders' equity?

    Understanding company valuation figures, such as shareholders' equity, can be a powerful tool in assessing the financial strength of a business.
  8. Trading Strategies

    What are the pros and cons of owning preferred stock instead of common stock?

    Understand and explore the advantages and disadvantages of owning preferred stock as opposed to owning common stock shares in a company.
  9. Fundamental Analysis

    What is the difference between market capitalization and enterprise value?

    Understand the basics of market capitalization and enterprise value, how they measure company value and how they differ in calculation and precision.
  10. 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.

You May Also Like

Hot Definitions
  1. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  2. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  3. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  4. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  5. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  6. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
Trading Center