Stockholders have limited liability unless they

Question

Quizplus · Accepted Answer

Stockholders in a corporation are only liable up to the amount of their investment unless they assume personal liability for the corporation's debt. This means that if the corporation goes bankrupt or incurs debts, the stockholders are not personally responsible for paying those debts. However, if a stockholder signs a personal guarantee or takes on some other type of personal liability for the corporation's debts, they can become personally liable. Therefore, choice B is the correct answer. Choices A, C, and D are incorrect because active management or ownership of preferred stock does not impact a stockholder's liability, and there is no way to convert shares of a corporation to partnership status.

Stockholders Have Limited Liability Unless They