What are securities that represent part ownership or equity in a corporation called?

Prepare for the Utah Financial Literacy State Test. Dive into interactive questions, complete with explanations and tips, to ensure your success. Boost your financial skills and ace the exam!

Securities that represent part ownership or equity in a corporation are known as stocks. When an individual purchases stock, they are buying a share of the company, which entitles them to a portion of the company's profits, typically in the form of dividends, and gives them voting rights in shareholder meetings. Stocks are a fundamental component of the equity market and allow investors to participate in the economic growth of the company.

Other choices are related to investments but do not accurately describe ownership in a corporation. Derivatives refer to financial instruments whose value is derived from the performance of an underlying asset, such as stocks or commodities, but they do not represent ownership in the issuing corporation. Options are a type of derivative that gives the holder the right, but not the obligation, to buy or sell a stock at a specified price before a certain date. Funds typically refer to mutual funds or exchange-traded funds that pool money from many investors to purchase a diversified portfolio of stocks, bonds, or other assets, but they do not themselves represent direct ownership in a corporation.

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy