Equity holders absorb credit losses on the asset portfolio because liability holders are junior claimants.

Name: Equity holders absorb credit losses on the asset portfolio because liability holders are junior claimants.
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Equity holders are the last to absorb losses, as liability holders (creditors) have senior claims on the assets of a company. Equity holders are considered residual claimants, meaning they only receive what is left after all liabilities have been paid.

Equity Holders Absorb Credit Losses on the Asset Portfolio Because