How Does the Principle of Limited Liability Make the Corporation

question 63

Multiple Choice

How does the principle of limited liability make the corporation well suited to raising large amounts of capital?

• A) public disclosure of information regarding the corporation's finances
• B) a corporation's investors protected against limited losses
• C) a corporation is subject to greater outside scrutiny
• D) protects investors against unlimited losses

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Definitions:

Risk Lover

An individual or investor who prefers to take more risk in their investments for the possibility of higher returns.

Risk-Neutral

An attitude or assumption in financial theory where an investor doesn't require higher returns for taking on more risk.

Risk Averse

Refers to the preference of individuals or entities to avoid uncertainty and risky situations, opting for the safest outcome when faced with choices.

Whole Life

A type of life insurance policy that offers lifetime coverage, with consistent premiums and a savings component.