What is the minimum amount that shareholders should expect to receive in the event of a complete corporate liquidation?
A) Market value of equity.
B) Book value of equity.
C) Zero.
D) Shareholders may be required to pay to be liquidated.

Question

Quizplus · Accepted Answer

In the event of a complete corporate liquidation, the first priority is to pay off any outstanding debts and liabilities, including those to creditors and bondholders. Whatever is left over is then distributed to shareholders. However, there is no guarantee that any funds will be left for shareholders, as their interests are secondary to those of creditors and bondholders. As a result, shareholders should realistically expect to receive zero in the event of a complete corporate liquidation.

What Is the Minimum Amount That Shareholders Should Expect to Receive