Question

Common stock is no longer strictly a limited liability investment because under new rules stock investors...

Common stock is no longer strictly a limited liability investment because under new rules stock investors can sometimes be liable to pay for company losses beyond losing their investment in the shares.

Question 8 options:

True
False
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Answer #1

Hey

THE CORRECT ANSWER IS FALSE.

Common Stock is, was and will be limited liability investment. The liability of common stockholders is limited to their investment. No matter how much accumulated loss the company have, common stockholders can't be held personally liable for any shortfall of payments to creditors or any other parties.

I hope this solves your doubt.

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