Hillier owns some common stock in a company that is experiencing serious financial problems and may have to declare bankruptcy. Hillier shouldn't worry, because as a common shareholder, his claims on the company's assets must be paid before the claims of any other stakeholders.

Question

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As a common shareholder, Hillier's claims on the company's assets are subordinate to the claims of creditors, bondholders, and preferred shareholders. In the case of bankruptcy, common shareholders are usually the last to receive any distribution of assets.

Hillier Owns Some Common Stock in a Company That Is