SIE Exam Question 185: Answer and Explanation

Question: 185

A ____________ is an equity investment representing ownership in a corporation.

• A. Corporate bond
• B. Common stock
• C. Warrant
• D. Right

Correct Answer: B

Explanation:

Common stock is an equity investment representing ownership in a corporation. Corporate bonds give investors ownership of future cash flows, meaning companies owe investors the principal of the bonds, as well as interest, at a designated point in the future. A warrant and a right both give an investor the right but not the obligation to conduct a particular transaction.