Stock Market Principles and Investor Protections Quiz

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Questions and Answers

What provides Josie with limited liability as an investor in the stock market?

  • Limited liability for investors (correct)
  • Legal personality
  • Transferability of investor ownership
  • Separation of legal ownership and management control

What is true about shareholders in a public stock company?

  • They are appointed by a board of directors to oversee the company’s management
  • They directly supervise and coordinate the manufacture of products and delivery of services
  • They are the centerpiece of corporate governance
  • They are granted a charter of incorporation by the state and legally own company stock (correct)

What allows investors to freely buy and sell their ownership stakes in a company?

  • Separation of legal ownership and management control
  • Limited liability for investors
  • Transferability of investor ownership (correct)
  • Legal personality

What ensures that the company's management control is distinct from the legal ownership of the company?

<p>Separation of legal ownership and management control (C)</p> Signup and view all the answers

What is an advantage for Josie in terms of investing in the stock market?

<p>Limited liability for investors (A)</p> Signup and view all the answers

What is true of shareholders in a public stock company?

<p>They are granted a charter of incorporation by the state and legally own company stock (A)</p> Signup and view all the answers

What legal protection might reassure Josie about investing in the stock market?

<p>Corporate veil (C)</p> Signup and view all the answers

What is a key aspect of corporate governance in a public stock company?

<p>Board of directors oversight (A)</p> Signup and view all the answers

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