Because equity holders are the last to receive any distribution of assets as a result of bankruptcy proceedings, common stockholders expect
A) fixed dividend payments.
B) greater compensation in the form of dividends and/or rising stock prices.
C) all profits to be paid out in dividends.
D) warrants to be attached to the stock issue as a sweetener.

Question

Quizplus · Accepted Answer

Since equity holders are last in line for any distribution of assets in case of bankruptcy, they expect to receive greater compensation in the form of dividends and/or rising stock prices. It is not realistic to expect fixed dividend payments, all profits to be paid out in dividends, or warrants to be attached to the stock issue as sweeteners.

Because Equity Holders Are the Last to Receive Any Distribution