Clients of poor beneficiaries will support priority beneficiaries. When the project suffers losses, the property of inferior offspring will be used for priority compensation. When making a profit, the priority person shall participate in the dividend according to the proportion agreed in advance. Inferior level and priority are twin brothers, which are very common risk/benefit arrangements in financial products. Structured trust products issued by trust companies can purchase priority trust products or inferior products in the same product.
Priority beneficiaries shares a lower rate of return and bears less risks, while poor beneficiaries bear higher risks and get higher returns. Generally speaking, in terms of income, the priority will remain relatively certain and there is an upper limit on the expected rate of return; There is no clear rate of return target for the inferior level. In the simplest priority/inferior structure, all the residual income generated by product investment belongs to inferior structure.
Compared with inferior capital, priority capital refers to the part of bank capital that has priority over ordinary capital in dividend distribution and principal repayment. It is the economically applicable capital of bank capital and has a priority position in financial activities. There are two main types: preferred stock and debt capital. If there is a loss, lose money first, give priority to not taking risks and enjoy fixed income. In stock allocation, customers are inferior funds, and fund-raising companies are priority funds.