2.1.3 liability

Question 1

what is limited liability

Answer 1

when an investors liability/ financial commitment is limited to the total amount they invested in share capital. An investors personal belongings beyond the venture are protected.

Question 2

what is unlimited liability

Answer 2

when the owners of a business are responsible for the total amount of debt of the business. the owner may lose their personal belongings such as home and car if the value of these is needed to cover the debts of a business.

Question 3

is unlimited liability seen as high or low risk

Answer 3

high risk