2.1. Equity quiz : financial risk

I dont have the specific question as i closed the quiz in section 2.1 . It went something like this
“which of the following is a risk to common stock”
and the explanation said " Bankruptcy is not a risk to common stock as financial bankruptcy risk applied to debts not stock "

This logic is not true obviously . If debtors cannot be paid, the common stock value is $0 because of liquidation preferences.

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Hi @Ernesto_Bahringer, it might seem strange, but a bankrupt company is not worthless.

Bankruptcy means that a company can’t currently pay its debts, not that it’s forced to go out of business.

As an example, General Motors [GM:NYSE] was once bankrupt but recovered, and today has a market cap of $45.68 billion.