Travis owns shares of Lobster Krown Inc., a food and beverages company. The company's financial situation takes a turn for the worse and ends up in severe debt. Despite owning shares of Lobster Krown, Travis is not responsible for bringing more money into the company to get it out of its debt. Which characteristic of public stock companies does this scenario best exemplify?

Question

Business

Kristian

27 July, 20:22

Travis owns shares of Lobster Krown Inc., a food and beverages company. The company's financial situation takes a turn for the worse and ends up in severe debt. Despite owning shares of Lobster Krown, Travis is not responsible for bringing more money into the company to get it out of its debt. Which characteristic of public stock companies does this scenario best exemplify?

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Answers (1)

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Eleanor Ellison · Answer 1

limited liability for investors

Explanation:

Limited liability is a form of legal framework for an entity in which the amount of money invested in a corporation or limited liability company will not surpass a corporate loss.

In certain phrases, private assets of investors and shareholders are not at risk if the business fails.