A visual explanation of senior priority, junior residual value and possible impairment.
·2 min read
The model values total assets, subtracts the senior claim and assigns the remainder to junior equity. A price shock therefore reduces junior reference value first. If assets fall below the senior claim, senior impairment appears in the waterfall too.
Priority is a claim order, not guaranteed principal. The loss reserve in Risk Lab is a scenario input, not funded insurance. Run the Risk Lab and read reference value versus cash.
