In investment terms, what represents ownership in a company?

Ownership in a company is represented by stock. When an individual buys stock, they are purchasing a share of ownership in that company, which can include both common and preferred shares. This ownership entitles the shareholder to a portion of the company’s profits, often distributed as dividends, and grants them voting rights in company decisions, depending on the type of stock they hold.

Bonds, on the other hand, are a form of debt investment; they represent a loan made by an investor to a borrower (typically corporate or governmental). Investors in bonds receive interest payments but do not have ownership stake in the company.

Mutual funds pool money from many investors to purchase a diversified portfolio of stocks and/or bonds. While investors in a mutual fund have ownership in the fund itself, they do not directly own shares of the underlying companies that the fund invests in.

Certificates of deposit (CDs) are savings instruments offered by banks that earn interest over a fixed term. Like bonds, CDs do not represent ownership in a company but instead represent a loan to the bank, which is repaid with interest.

Thus, stock is the correct choice as it embodies ownership within a company.