Question

Which of the following does NOT describe the purpose and practice of selling stocks? A. Companies often raise money for operations or particular ventures by selling stocks. B. Holders of stocks (stockholders) become part owners of the company. C. Stocks are also known as shares, and another name for stockholders is shareholders. D. Stockholders are protected from financial loss if the company does poorly.

Answer 1

The answer to this problem is D: Stockholders are protected from financial loss if the company does poorly.

Explanation: Stockholders are apart of the company, therefore not protecting them, and they will get paid less.

Answer 2

"D. Stockholders are protected from financial loss if the company does poorly" is not true. Because stockholders own a part of the company, they benefit when the company does well and lose money when the company does poorly.