Friday, October 17, 2008

Why do we need stock markets?

This article has made it to the front page of digg written by Alec Chrystal. Here is the excerpt:

A key reason for forming a company is that the shareholders of a modern company have "limited liability". This means that a shareholder can lose what they paid for their shares in a company but they are not liable for the debts of the company beyond that. This is not true in, for example, a partnership, where partners are jointly liable for all the debts incurred.

Investing in company shares is thus potentially attractive, as shareholders get a share of the profit of the business but know that the worst that can happen is that they lose the value of the original investment.
Read more at Why do we need stock markets ?

0 comments: