The key value of limited liability is that it lowers the firm's risk thereby enhancing its value.

Question

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Limited liability means that shareholders are only liable for the amount of their investment in the company. This means that their personal assets are not at risk in case the company incurs debts or lawsuits. By limiting the risk of the shareholders, the overall risk of the company is lowered, which can make it more valuable in the eyes of investors.

The Key Value of Limited Liability Is That It Lowers