2.1.3

Question 1

What is meant by ‘limited liability’?

Answer 1

When an investor’s liability/financial commitment is limited to the total amount invested or promised in share capital

Question 2

Is limited liability seen as a risk?

Answer 2

No - the investor’s personal belongings beyond this venture are protected

Question 3

What is meant by ‘unlimited liability’?

Answer 3

When the owners of a business are responsible for the total amount of debt of the business

Question 4

Is unlimited liability seen as a risk?

Answer 4

Yes- the owner may lose their personal belongings