Final answer:
Limited liability for investors in a public stock company indicates that shareholders can only lose the amount they've invested in the company, their personal assets are not at risk. This concept facilitates capital raising for the company through the sale of stock or bonds, empowering businesses to expand while protecting investors.
Step-by-step explanation:
Limited liability for investors in a public stock company means that the shareholders, who are the owners of the company, have their financial responsibility for the company's debts capped at the amount they've invested. Investors in these corporations can lose their investments if the company fails, but their personal assets are protected. This framework encourages people to invest in companies by purchasing stock, providing a way for businesses to raise capital for expansion or other purposes without exposing investors to the risk of losing more than they have put into company stocks.
Public corporations can optimize growth opportunities by selling stock or issuing bonds. This ability to raise funds aids in financing operations and new investments. When individuals invest in a company's stock, they gain a share of ownership and become shareholders. A shareholder's liability is limited, so their private wealth is not at risk beyond their investment in the stock, even if the company incurs significant debt or declares bankruptcy.