The 10 Laws of Daytrading
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6 As Figure 3 illustrates, the risks associated with debt, preferred stocks, and common equity are different and depend on the value of the firm at liquidation. Hence, if a firm has no value at liquidation the investments of all security holders are worthless. If the firm value is less than or equal to the amount owed to bondholders, only the bond holders get repaid (in their order of seniority) and the preferred and common stock holders’ investments are worthless. If the firm liquidates at a value higher than the...
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The 10 Laws of Daytrading
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The 10 Laws of Daytrading
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