What does owning a stock represent?

Owning a stock represents a claim on the company's assets and earnings because when you purchase a share of stock, you are buying a piece of ownership in the company. This ownership entitles you to a proportional share of the company's profits, which may be distributed as dividends. Additionally, if the company were to liquidate its assets, shareholders would have a claim on those assets after all debts have been paid, although they are last in line behind creditors and bondholders.

This ownership structure highlights the risk and potential rewards associated with stock investments, as shareholders benefit from the company's success but also face the risk of losing their investment if the company performs poorly. This contrasts with the incorrect choices, which either imply guaranteed returns or suggest a completely different financial instrument that does not represent ownership in a company.