A business entity that raises money by selling shares to investors is called a
a.
partnership.
c.
factory.
b.
corporation.
d.
cottage industry.

Please select the best answer from the choices provided

A
B
C
D

C. corporation.

Explanation:

A business entity needs capital to start up its business. Hence the need for investors to contribute their quota to effectively begin the business in return for profits. Capital is an essential factor of production, without which businesses would not be formed.

What then is a Corporation? A Corporation is a separate business/legal entity distinct from its members. To start up a Corporation, the presence of shareholders is important. Shareholders are the investors who own different shares of a corporation share capital. For instance, a Company when starting its business will have a share capital of let say, 1 million dollars. This share capital is then divided among the shareholders, depending on how they want it to be shared.

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