Equity and Debt Claims

An equity claim is a claim on the earnings of the company. I own part of the company and expect to receive a portion of the earnings. The debt holder has a claim against the property of the company. I own part of the property and expect a return for its use, whatever the company may be able to earn from that property. As such, an equity claim varies more widely in the fruit of the property, while the debt claim is fixed because it is based on the property itself rather than what is derived from its use.

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