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:

Practice

The repeated exercise or application of an activity or skill to achieve proficiency.

Entrepreneurship

The process of initiating a business or businesses, facing financial dangers with the expectation of profit.

Serial Entrepreneur

A person who repeatedly starts new businesses, moving from one venture to another, and often leveraging the experiences and capital from previous successes.

Benefit Corporation (B-Corp)

A type of legal structure for a business that aims to generate profit while also focusing on positive impacts for society, workers, the community, and the environment.