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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  1. What is the difference between preference and ordinary shares?

    Preferred shareholders have a higher priority claim to the assets of a corporation in case of insolvency than common shareholders. Read Answer >>
  2. What happens to a company's stock when it goes bankrupt?

    Shareholders may be entitled to a portion of the liquidated assets in the wake of a company bankruptcy, but the stock will ... Read Answer >>
  3. 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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