Junior stock

Junior stock is shares in a corporation that have a lower priority for payment in the event of a liquidation. Thus, if a company liquidates, the holders of debt and more senior stock will be paid first, after which the holders of junior stock are entitled any residual funds. Common stock is usually considered to be junior stock when a company has also issued preferred stock; this is because the holders of the preferred stock have senior rights in comparison to those of the common stockholders.

Related Courses

Corporate Finance 
Treasurer's Guidebook