Common stock possesses the highest claim on the assets and cash flow of the firm.

Name: Common stock possesses the highest claim on the assets and cash flow of the firm.
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Question

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Common stock holders have residual ownership in the firm and do not have a guaranteed claim on assets and cash flow. They are the last in line to receive any payments in case of bankruptcy or liquidation. Bondholders, preferred stock holders, and other creditors have a higher claim on the assets and cash flow of the firm.

Common Stock Possesses the Highest Claim on the Assets and Cash