What type of financial instrument represents ownership in a company?

• A. Bond
• B. Share
• C. Option
• D. Future

Answer: (B)

The correct choice is represented by a share, which signifies ownership in a company. When an individual buys shares, they are purchasing a piece of the company, which means they have a claim on a portion of the company's assets and earnings. Shares are a fundamental equity instrument, allowing investors to participate in the company's growth and profits, typically through dividends and appreciation in share value.

In contrast, bonds represent debt rather than ownership. When an investor buys a bond, they are lending money to the issuer—usually a corporation or government—who pays interest over time and returns the principal upon maturity. Options and futures are types of derivatives that derive their value from underlying assets but do not confer ownership. An option gives the holder the right, but not the obligation, to buy or sell an asset at a predetermined price, while a future is a contract to buy or sell an asset at a future date for a price agreed upon today. Therefore, shares are distinctly associated with ownership, which makes them the correct answer.