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"Education is the most powerful weapon which you can use to change the world”
– Nelson Mandela

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Homework Chapter 7

Homework Chapter 7

Q 1. How Are Assets Divided in Bankruptcy?

Q 2. List two types of stock.3. Define par value.4. Define preemptive right.5. Define dilution of earnings.

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1.Secured Creditors - often a bank, is paid first. Unsecured creditors - such as banks, suppliers, and bondholders, have the next claim. Stockholders - owners of the company, have the last claim on assets and may not receive anything if the Secured and Unsecured Creditors' claims are not fully repaid. 2.There are two main types of stocks: common stock and preferred stock. 3.The stock value indicated in the corporate charter is referred to as the par value of a share. The par value of shares is frequently zero or very low, such as one cent per share. When it comes to equity, the par value has very little to do with the market price of the shares.