Question

James decides to invest money in Wal-Mart. As a shareholder, he has the advantage of

(select all that apply)


A. limited liability


B. limited life


C. unlimited liability


D. double taxation


E. ease of start up

Answer 1

A. limited liability

Explanation:

Because James has become a shareholder by investing in Walmart, he has the advantage of limited liability. This basically means that he shares in both the gains and the losses of Walmart's business decisions but only up to the amount that he has invested into it. Meaning that if James invested a total of $2000 and Walmart goes under, then he will lose all $2000 but not more than that.