A shareholder is best described as which of the following?

A shareholder is best described as which of the following?

• A. An investor who has bought shares
• B. A person who manages the company
• C. A creditor who lends money
• D. An employee who owns stock options

Answer: (A)

A shareholder is someone who owns part of a company by buying its shares, making them an owner-investor. Owning shares means you have a claim on a portion of profits (via dividends) and potential gains from the company’s growth (capital appreciation). You may have voting rights on major issues and board elections, but you’re not the person running the company day-to-day (that’s the management). You’re also not a lender or creditor, who provides funds and expects repayment with interest. Stock options held by an employee can lead to ownership only if those options are exercised to buy actual shares. So the best description is an investor who has bought shares.

A shareholder is someone who owns part of a company by buying its shares, making them an owner-investor. Owning shares means you have a claim on a portion of profits (via dividends) and potential gains from the company’s growth (capital appreciation). You may have voting rights on major issues and board elections, but you’re not the person running the company day-to-day (that’s the management). You’re also not a lender or creditor, who provides funds and expects repayment with interest. Stock options held by an employee can lead to ownership only if those options are exercised to buy actual shares. So the best description is an investor who has bought shares.