Honor Economics Practice Exam

Ownership by many investors who buy shares of stock describes a corporation. In a corporation, the business is a separate legal entity from its owners, and ownership is divided into shares of stock. People can buy these shares to become shareholders, allowing many investors to participate and helping the company raise substantial capital. Shareholders enjoy limited liability, meaning their personal assets are generally protected beyond their investment.

Sole proprietorships have a single owner who runs the business and bears unlimited personal liability. Partnerships involve two or more owners who share profits and responsibilities, typically without issuing stock to the public. Franchises are a licensing arrangement, not a form of ownership by many investors through stock. So the description best fits a corporation.