Because equityholders are the last to receive any distribution of assets as a result of bankruptcy proceedings,they expect ________.

Question

Quizplus · Accepted Answer

Equityholders expect greater returns from their investment than bondholders because they take on more risk. However, in the event of bankruptcy, they are the last to receive any distribution of assets, so they cannot expect fixed dividend payments or all profits to be paid out in dividends. Warrants may be attached to the stock issue, but this is not necessarily an expectation of equityholders in bankruptcy proceedings.

Because Equityholders Are the Last to Receive Any Distribution of Assets