Which instrument provides ownership in a company and is commonly traded on exchanges?

• A. T-Bill
• B. Stocks
• C. Bonds
• D. Insurance

Answer: (B)

Ownership in a company is provided by equity instruments called stocks. When you own stock, you hold a share of the company, which can give you voting rights in some matters and a claim to a portion of profits through dividends, as well as a residual claim on assets if the company is sold or liquidated. Stocks are traded on stock exchanges, which is how investors buy and sell ownership stakes easily and with liquidity. The other options represent debt or risk-management products rather than ownership: a T-Bill is a short-term government debt security, bonds are longer-term debt issued by entities, and insurance is a risk-protection contract that isn’t ownership in a company and isn’t traded like stocks on exchanges. So stocks best fit the idea of owning a piece of a company and being traded on exchanges.