Which investment type represents ownership in a company?

• A. Stocks.
• B. Bonds.
• C. Mutual funds.
• D. Savings accounts.

Answer: (A)

Stocks represent ownership in a company. When you own stock, you hold a share of the company and have a claim on a portion of its assets and profits. Depending on the stock, you may have voting rights that let you influence certain corporate decisions. The investment’s value can rise or fall with how the company performs, and you may earn money through price appreciation and, in some cases, dividends. In contrast, bonds are a form of loan to the company and pay interest without giving you ownership. Mutual funds pool money to buy a variety of investments, so you don’t own a direct stake in individual companies within the fund. Savings accounts are bank deposits that earn interest but do not involve any ownership in a company.