Which instrument is typically described as an equity security that grants ownership and may include voting rights?

Which instrument is typically described as an equity security that grants ownership and may include voting rights?

• A. T-Bill
• B. Stocks
• C. CD
• D. Puts

Answer: (B)

Equity securities represent ownership in a company. Owning stock means you hold a share of the business and, with common stock, you typically have voting rights at shareholder meetings to influence governance and major corporate decisions. This ownership and potential voting ability is what distinguishes equity from other types of securities. For example, a T-Bill is a government debt instrument—the government borrows money from you and promises repayment with interest, but you do not own part of the government, nor do you get voting rights. A CD is a bank time deposit; you are lending money to the bank for a set period and receiving interest, with no ownership stake. Puts are options that give the right to sell an asset at a set price and are derivatives, not ownership interests. Therefore, the instrument described is stocks.

Equity securities represent ownership in a company. Owning stock means you hold a share of the business and, with common stock, you typically have voting rights at shareholder meetings to influence governance and major corporate decisions. This ownership and potential voting ability is what distinguishes equity from other types of securities. For example, a T-Bill is a government debt instrument—the government borrows money from you and promises repayment with interest, but you do not own part of the government, nor do you get voting rights. A CD is a bank time deposit; you are lending money to the bank for a set period and receiving interest, with no ownership stake. Puts are options that give the right to sell an asset at a set price and are derivatives, not ownership interests. Therefore, the instrument described is stocks.