Effective net worth

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Effective net worth

Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Effective Net Worth

The net worth of an individual or company plus what he/she/it owes in junior debt. Because, in the event of liquidation, junior debt is paid only after all senior debt is paid, the individual or company has a great deal more flexibility in repayment. This flexibility has the effect of adding to the individual or company's net worth.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
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