A stock represents ownership in a company and provides shareholders with ownership rights and the potential for dividends and capital gain through buying and selling on secondary markets. B) describes bonds, not stocks. C) is incorrect as stocks are also traded on secondary markets. D) is not accurate as commercial banks may buy and sell stocks but are not the only entities who do so. E) is incorrect as B, C, and D are all incorrect.

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A Stock Is

Question 4

Multiple Choice

A stock is

A) A financial instrument that provides ownership rights to shareholders
B) A financial instrument that provides annual payments of interest
C) A financial instrument that is traded only in primary financial markets
D) A financial instrument that is bought and sold by commercial banks
E) All of the above

Correct Answer: