The Limited Liability Rule Means That If a Corporation Goes

question 218

Multiple Choice

The limited liability rule means that if a corporation goes bankrupt,

• A)shareholders are responsible for all the debts of the firm.
• B)bondholders are responsible for all the debts of the firm.
• C)shareholders can only lose the amount they invested.
• D)bondholders only lose the face value of the bond.

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Definitions:

Invoice

A document issued by a seller to a buyer, detailing a transaction and requesting payment for products or services provided.

Negative News

Information or updates that convey adverse or undesirable messages, such as failures, losses, or unpleasant events.

Indirect-Order Message

is a communication strategy that presents the reasoning or background information before making the main point or requesting action, often used to soften negative news or requests.

Strategic Buffer

A planned reserve or cushion integrated into strategies or plans to mitigate unforeseen changes or challenges.