Hedge Fund Glossary

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Common Stock

the equity slice of the capitalization that sits at the bottom of the Capital Structure. Common Stock has no Interest payments, principal payments and Covenants. The only protections for common stockholders are the fiduciary duties owed to them by the board of directors. By contrast, no fiduciary duty is owed to the creditors of a solvent company. The creditors’ rights are entirely contractual. See, however, Zone of Insolvency. See also Ordinary Share.

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