Holders of ordinary shares have a residual interest in the net assets of the issuing company and are therefore exposed to greater risk than other classes of investors.

Question

Quizplus · Accepted Answer

This statement is true. Ordinary shareholders have the lowest priority in being paid out from the net assets of a company in case of bankruptcy or liquidation, after all other classes of investors and creditors have been paid. Therefore, they assume a higher risk than other investors who may have a higher priority in receiving payouts.

Holders of Ordinary Shares Have a Residual Interest in the Net