Which type of company is owned by its stockholders?

Which type of company is owned by its stockholders?

• A. Mutual Company
• B. Stock Company
• C. Foreign Company
• D. Domestic Company

Answer: (B)

A stock company is a type of insurance company that is owned by its stockholders. In this structure, ownership is represented by shares of stock, and stockholders have a financial interest in the company’s profits, as well as the right to vote on certain corporate matters. This model allows stock companies to raise capital by issuing shares to investors, who expect to receive dividends and see appreciation in the value of their shares. In contrast, a mutual company is owned by its policyholders rather than stockholders, meaning that profits are typically returned to the policyholders in the form of dividends. Terms like "foreign company" and "domestic company" refer to the geographic jurisdiction in which an insurance company is incorporated or operates, rather than its ownership structure. Therefore, stock company correctly identifies the entity owned by stockholders.

A stock company is a type of insurance company that is owned by its stockholders. In this structure, ownership is represented by shares of stock, and stockholders have a financial interest in the company’s profits, as well as the right to vote on certain corporate matters. This model allows stock companies to raise capital by issuing shares to investors, who expect to receive dividends and see appreciation in the value of their shares.

In contrast, a mutual company is owned by its policyholders rather than stockholders, meaning that profits are typically returned to the policyholders in the form of dividends. Terms like "foreign company" and "domestic company" refer to the geographic jurisdiction in which an insurance company is incorporated or operates, rather than its ownership structure. Therefore, stock company correctly identifies the entity owned by stockholders.