Question

In the early days of the new monetary system, stockholders were more willing to invest in corporations because of ________, which restricts their financial responsibility to whatever they invested in the company.

Answer 1

limited liability

Step-by-step explanation:

This is still true, limited liability is one of the main reasons why investors keep buying shares from corporations.

Limited liability refers to a condition held by the owners of certain companies (e.g. corporations, limited liability partnerships) where shareholders or partners are legally responsible for the company's obligations only to the extent of the money they invested in the company. For example, I bought $10,000 worth of stock of XYZ Corp., if XYZ goes bankrupt, I can lose my $10,000 but nothing more.