A _________ is MOST likely to raise capital by offering shares of stock to stockholders.

• A. Franchise
• B. Partnership
• C. Cooperative
• D. Corporation

Answer: (D)

Raising capital by offering shares of stock to stockholders is a hallmark of a corporation. A corporation is a separate legal entity that can issue shares of ownership to investors, allowing it to attract large sums of money from many stockholders without giving up control beyond the ownership represented by those shares. This equity financing model makes it easier to fund expansion, research, or large projects.

Other structures don’t rely on selling stock to a broad base of investors. A franchise is a licensed business format, not a company issuing stock to buyers. A partnership is owned by the partners who contribute capital and share profits and losses, but it typically doesn’t issue tradable stock to outside investors. A cooperative is owned by its members who contribute capital and benefit from the cooperative’s services, with capital raised mainly through member contributions rather than public stock issuance. Because the phrase “stockholders” aligns with stock issuance, the corporation is the best fit.