Limited Liability Means

question 57

Multiple Choice

Limited liability means:

• A)Stockholders of a corporation are not obligated to pay the corporation's debts out of their own pocket.
• B)Liabilities of a company cannot exceed its assets.
• C)Companies are not allowed to borrow unless they are profitable.
• D)Companies are less likely to be sued if they are formed as a corporation.

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Definitions:

Insider Trading

The illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information.

Material Information

Any information that could influence an investor's decision to buy or sell securities, including details about a company's financial status, operations, and any legal issues.

Securities Litigation Uniform Standards Act of 1998

A federal law that limits the securities class action lawsuits in state courts, aiming to prevent forum shopping and inconsistent rulings.

Class Action Suits

Legal actions in which a group of people collectively bring a claim to court or in which a class action is brought against a defendant.