Junior Security

DEFINITION of 'Junior Security'

A security that ranks lower than other securities in regards to the owner's claims on assets and income in the event of the issuer becoming insolvent.

BREAKING DOWN 'Junior Security'

When bankruptcy occurs, holders of both preferred shares and debt securities have first claim on the remaining assets. Only after preferred shareholders have been paid back, remaining assets (if any) are divided among common shareholders.

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RELATED FAQS
  1. What are preferred shares?

    Understand what preferred shares are. Learn about both the benefits and the drawbacks of preferred shares, which effects ... Read Answer >>
  2. What happens to the stock of a public company that goes bankrupt?

    Occasionally, publicly listed companies go bankrupt. The company's shareholders, depending on the type of stock they hold, ... Read Answer >>
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    Learn about the advantages and disadvantages of preference shares to both investors and issuing companies, including the ... Read Answer >>
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    Learn about the differences between bonds and preferred shares, including how payments are made on them and how corporate ... Read Answer >>
  5. Do common stock owners have any protections against bankruptcy or fraud?

    Learn about common stock ownership including the standing of holders in the event of bankruptcy or fraud, and familiarize ... Read Answer >>
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