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> shareholders are mostly creditors You need to understand the fundamental difference between debt and equity. A creditor gets his money back with interest, a
by AlbertCory 4y ago
> shareholders are mostly creditors
You need to understand the fundamental difference between debt and equity.
A creditor gets his money back with interest, and that's all. The firm could prosper or flail and it makes no difference as long as they pay him back. If the firm goes bankrupt, he's first in line for what's left of it.
A stockholder might get nothing back, but if the firm prospers, he shares in it. He's last in line in a bankruptcy.
- foul 4y ago"Mostly" is there exactly because they trade risk for power (and a virtually endless profit, in the best case scenario). Edit: With that power they may notice a gap in capital during a financial crisis, and they may force the firm to fill it with layoffs.
- AlbertCory 4y agoI don't know if you've ever studied econ, accounting, or finance, but I doubt it. the second sentence is beyond normal ignorance. We're done here.