Suppose a firm wanted to go out of business. The firm sells all its assets and pays off everything it owes to creditors. The stockholders would receive

Question

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When a firm goes out of business and liquidates its assets, after paying off all its debts and obligations to creditors, the remaining funds (if any) are distributed to the stockholders. This is because stockholders have residual claims on the assets of the firm, meaning they get whatever is left after all other claims have been satisfied.

Suppose a Firm Wanted to Go Out of Business