The Limited Liability Rule Means That If a Corporation Goes

question 142

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:

Cognitive Bias

An organized tendency to deviate from normal or logical thinking in making judgments, leading to conclusions about people and situations that are drawn illogically.

Balanced Scorecard Framework

A strategic planning and management system used to align business activities with the vision and strategy of the organization, improve internal and external communications, and monitor organizational performance.

Strategic Initiatives

Long-term plans or actions taken by a business to achieve its goals and improve its competitive position.

CSR Efforts

Initiatives taken by a company to assess and take responsibility for its effects on environmental and social well-being, often going beyond compliance and engaging in actions that further social good.