5 Questions
What is a Joint Stock Company?
A business entity where ownership is divided into shares of stock, and the capital is raised by issuing these shares to investors.
What are the advantages of a Joint Stock Company?
- Limited Liability: Shareholders are not personally responsible for the company's debts beyond their invested capital. 2. Capital Formation: Easier to raise large amounts of capital by issuing shares. 3. Transferability of Shares: Shares can be bought and sold, providing liquidity for investors. 4. Professional Management: Allows for the hiring of professional managers to run the company.
What are the disadvantages of a Joint Stock Company?
- Complexity and Cost: Setting up and maintaining a Joint Stock Company can be complex and costly. 2. Loss of Control: Shareholders may have limited control over company decisions due to dispersed ownership. 3. Conflict of Interest: Interests of shareholders and management might not always align.
Why is limited liability an advantage of a Joint Stock Company?
Shareholders are not personally responsible for the company's debts beyond their invested capital.
How does a Joint Stock Company ease capital formation?
It is easier to raise large amounts of capital by issuing shares.
Test your knowledge of Joint Stock Companies with this quiz! Explore the advantages of this corporate structure, including limited liability and capital raising, and deepen your understanding of this business entity's unique features.
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