Advanced Placement US History (AP US History) Practice Exam

What is a joint-stock company?

1. A type of non-profit organization

2. A business owned by investors through the control of stocks

3. An individual owning all shares of a business

4. A cooperative run by local farmers

The correct answer is: A business owned by investors through the control of stocks

A joint-stock company is defined as a business owned by investors through the control of stocks. This structure allows multiple investors to contribute capital to the company and, in return, they receive shares representing their ownership stake. The ability to sell shares helps companies raise funds for various ventures, which is particularly significant in the context of exploration and colonization during the Age of Discovery. Notable examples include the British East India Company and the Virginia Company, which enabled the funding of various colonial enterprises. The other options do not accurately describe a joint-stock company. Non-profit organizations do not involve investment for profit, while a business owned entirely by one individual represents sole proprietorship rather than shared ownership. Lastly, a cooperative run by local farmers implies a collective model focused on mutual benefit rather than the profit-driven investment characteristic of joint-stock companies.