How does an investor typically obtain an ownership interest in a company?

• A. By purchasing shares of the company's stock
• B. By acting as an external auditor
• C. By providing a loan to the company
• D. By preparing the company's financial statements

Answer: (A)

Verified step by step guidance

1. Understand the concept of ownership interest: Ownership interest in a company typically refers to having a stake or share in the company, which gives the investor certain rights, such as voting rights and a share in the company's profits.
2. Analyze the options provided: Evaluate each option to determine whether it results in ownership interest. For example, purchasing shares of stock directly represents ownership, while other options may not.
3. Option 1: 'By purchasing shares of the company's stock' - Purchasing shares means buying a portion of the company, which directly grants ownership interest.
4. Option 2: 'By acting as an external auditor' - External auditors are independent professionals who review financial statements but do not gain ownership interest in the company.
5. Option 3: 'By providing a loan to the company' - Providing a loan makes the investor a creditor, not an owner. Similarly, preparing financial statements (Option 4) is a service and does not result in ownership.