Assume for a moment that the shareholders in a corporation have unlimited liability for corporate debts.If so,what impact would this have on the functioning of primary and secondary markets for ordinary equity?

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The Answer is With unlimited liability,you would be very careful which stocks you invest in.In particular,you would not invest in companies you expected to be unable to satisfy their financial obligations.Both the primary and secondary markets for equity would be severely hampered if this rule existed.It would be very difficult for a young,untested business to acquire enough capital to grow.

Assume for a Moment That the Shareholders in a Corporation