[Hot News] [STOCKS] - What Happens If You Own Stock In A Company That Goes Bankrupt?

[Hot News] [STOCKS] - What Happens If You Own Stock In A Company That Goes Bankrupt?
Di Posting Oleh : Crew Blog
Kategori : 2016 COMMERCE FAQ FINANCE INVESTMENTS Q&A STOCK BROKERAGE STOCK EXCHANGE STOCK MARKET STOCK TRADING STOCKS

If you were holding certain number of stocks of a company and after sometime the company becomes unprofitable and finally goes bankrupt, what will be the future of such stocks and their stock holders?

Well, this is a question that comes up to us quite frequently from newbies of the stock market who had just invested in a stock of a company that went bankrupt. However, before being able to answer such questions, one must understand that trading in stocks in a stock market always comes at a higher risk factor.

In this case, if you are dealing with a stock categorized under the "common stocks" category by the respective company, which normally is the case for most of the stocks that are out there in the stock markets then you are at a risk of loosing all the money that you had invested in the stock.

The fundamental nature of the stock is that it provides you with a part of the ownership of that company who's shares you had bought. Now, being an owner of the company may help you give an opportunity to make profit out of this company's profitability, but on the other hand it also means that if the company does not make any profit and goes bankrupt, you are also at a risk of being the owner who is on the verge of losing all his investments on the company.

However, there is one distinctive advantage of owning stocks of a company to claim the ownership, that could get bankruptcy situation a lot better for you. And that is the fact that you are under a limited liability for the company's negative performance. In other words, if and when the company goes bankrupt, its liability to other large lenders to the company such as that of banks and insurance companies are not automatically burdened upon you. So, even if you held a large stack of that company's stock that has gone bankrupt, you are still safe from losing any of your own personal assets as a liability for that company. So your own house, car or any other valuable goods you possess will not be taken over by the banks.

So while being a stock owner of a company will give you one vote right for every share you hold in that company which would be used during any board decisions, you are also at a risk of losing your capital investment money if your company declares bankruptcy!

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