Which instrument is typically used by corporations to raise capital in the form of ownership?

Which instrument is typically used by corporations to raise capital in the form of ownership?

• A. Convertible debt
• B. Common stock
• C. Commercial paper
• D. Treasury bonds

Answer: (B)

Raising capital in the form of ownership means issuing equity, giving investors an ownership stake in the company. The instrument that represents that ownership is common stock, which provides investors with a claim on corporate assets and earnings and typically voting rights. Other options are debt instruments: convertible debt is a loan that can convert to equity later, so it isn’t ownership until conversion; commercial paper is short‑term corporate borrowing; and Treasury bonds are government debt.

Raising capital in the form of ownership means issuing equity, giving investors an ownership stake in the company. The instrument that represents that ownership is common stock, which provides investors with a claim on corporate assets and earnings and typically voting rights. Other options are debt instruments: convertible debt is a loan that can convert to equity later, so it isn’t ownership until conversion; commercial paper is short‑term corporate borrowing; and Treasury bonds are government debt.