Capital Structure and Liquidation Priority

What this video covers

• The definition of capital structure as the mix of debt and equity financing, and why higher leverage raises financial risk for every stakeholder
• The inverse risk-return relationship: how secured bondholders get lowest yield because they board the lifeboat first, while common stockholders get last dibs but unlimited upside
• The five-level absolute priority rule in liquidation: secured debt, then unsecured debentures, then subordinated debt, then preferred stock, then common stock
• Why creditors always beat equity holders regardless of adjectives, and how "senior preferred stock" still loses to "junior subordinated debenture"
• The critical exam distinction that preferred stock is equity, not debt, and must wait behind every bondholder class
• What residual claim means for common stockholders, and why they typically receive nothing in a corporate liquidation
• How to spot and defeat the three most common gotcha questions the Series 65 throws at this topic