Final answer:
Stockholders assume limited liability, meaning their potential losses are restricted to the amount they invested in the company, and their personal assets are not at risk beyond this investment.
Step-by-step explanation:
Among the options provided regarding the truth about stockholders, the correct answer is (D) they assume limited liability. Shareholders, or stockholders, are the owners of a company through their purchase of stock, which represents a share of ownership in the corporation. Stock can be either preferred or common, giving the owner certain rights and potential earnings from the company’s operations. Importantly, the liability of stockholders is limited to the extent of their investment in the firm. That is, they can lose their investment if the company fails, but their personal assets are not at risk. Corporations benefit from this structure as it enables them to easily raise or borrow money for expansion or other business purposes by selling stock.