130k views
4 votes
Jamiro Inc. is a public stock company. Which of the following statements about the company best illustrates the fact that its investors have limited liability?

1) The investors are only liable for the amount they have invested in the company.
2) The investors are personally liable for all the debts and obligations of the company.
3) The investors have unlimited liability for any losses incurred by the company.
4) The investors have the right to vote on major company decisions.

User Klathzazt
by
7.5k points

1 Answer

4 votes

Final answer:

The statement that accurately shows investors have limited liability in Jamiro Inc. is that they are liable only up to the amount they've invested. Corporate structure protects personal assets of investors.

Step-by-step explanation:

Among the statements provided regarding Jamiro Inc., a public stock company, the one that best illustrates the fact that its investors have limited liability is: The investors are only liable for the amount they have invested in the company. This principle means that should the company face financial troubles or bankruptcy, the personal assets of investors are protected, and their financial loss is restricted to the capital they have contributed through their investment in the company's stock. Conversely, a statement suggesting investors have personal liability or unlimited liability for the company's debts and obligations would be incorrect given the nature of a corporation's structure. Moreover, while investors typically have voting rights on major company decisions, that does not reflect the nature of their financial liability.

Corporations are able to raise funds and finance growth or expansion by selling stock or issuing bonds, because investors are attracted to the limited liability aspect of owning corporate stock. This facilitates easier access to capital for corporations when compared to other types of business structures.

User Mcserep
by
8.2k points