The genius of public corporations stems from their capacity to allow efficient sharing or spreading of risk among many investors, who can buy and sell their ownership shares on liquid stock exchanges and let professional managers run the company on behalf of shareholders. This risk sharing stems from

A. the liquidity of the shares. B. the limited liability of shareholders. C. the limited liability of bondholders. D. the limited ability of shareholders.

Question

Sophie Chaney

Business

10 June, 06:51

The genius of public corporations stems from their capacity to allow efficient sharing or spreading of risk among many investors, who can buy and sell their ownership shares on liquid stock exchanges and let professional managers run the company on behalf of shareholders. This risk sharing stems from

A. the liquidity of the shares. B. the limited liability of shareholders. C. the limited liability of bondholders. D. the limited ability of shareholders.

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Answers (1)

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Greta Jennings · Answer 1

The correct answer is B. the limited liability of shareholders.

Explanation:

The legal representative of the bondholders is a mandatory figure in the issuance of bonds traded in the stock market. The legal representative of the bondholders has the primary function of performing the necessary acts for the exercise of the rights and the defense of the interests of the holders. Its activity is regulated, which includes a series of duties of management, defense, communication and conservation of mandatory compliance. In addition, he acts as spokesperson for the bondholders before the issuer, the Financial Superintendence of and third parties.

The legal representative of the bondholders will respond up to a slight fault in the fulfillment of their obligations.