Which of the following does NOT describe the purpose and practice of selling stocks? Companies often raise money for operations
or particular ventures by selling stocks. Stocks and known as shares, and another name for stockholders is shareholders. Holders of stocks (stockholders) become part owners of the company.
All the options of the chart are correct. There's a missing option, that says "Stockholders are protected from financial loss if the company does poorly", which is the incorrect option.
Explanation:
Stockholders are not protected from financial loss if the company does poorly. As they are owners of a part of the company, if the company looses value, their part looses its value too. They assume the risk of the inversion, and they are not protected by any law regarding economic probabilities of failing.
