Asked by Kevin Starrett on May 21, 2024
Verified
Limited liability means that
A) creditors have no legal claim on the personal assets of a proprietor.
B) corporations cannot be sued.
C) creditors have no legal claims.
D) creditors have no legal claim on the personal assets of a corporate stockholder.
E) corporations have a legal life independent of their owners and managers.
Limited Liability
A legal structure that limits the financial liability of an individual in a business to their investment in the company, protecting personal assets from business debts and obligations.
Personal Assets
Items of value owned by an individual, including both tangible assets like property and financial assets such as cash and stocks.
Corporate Stockholder
An individual or entity that owns shares in a corporation, thereby holding a portion of its equity.
- Discern the differences among several investment varieties and economic instruments.
Verified Answer
JH
Jaiden HolcombMay 24, 2024
Final Answer :
D
Explanation :
Limited liability refers to the fact that creditors of a corporation cannot go after the personal assets of individual stockholders. Option A is incorrect because it refers to a proprietor instead of a stockholder. Option B and C are incorrect because they are too broad and imply that creditors have no legal recourse at all. Option E is incorrect because it is incomplete and only refers to corporations.
Learning Objectives
- Discern the differences among several investment varieties and economic instruments.