What type of investment entitles the holder to ownership and a share of profits in the form of dividends?

Study for the Variable Universal Life/Universal Life Plan (VUL/ULP) Exam. Prepare with flashcards and multiple choice questions, each question is accompanied by helpful hints and explanations. Ace your exam!

Ownership in a company is represented by ordinary shares, which entitle the holder to a claim on the company's assets and earnings. When individuals purchase ordinary shares, they are effectively buying a part of the company, which often comes with voting rights and the potential to receive dividends.

Dividends are payments made by a corporation to its shareholders, typically derived from the company's profits. As shareholders, individuals benefit from the company's success through these dividends, which can vary based on the company's financial performance and its board of directors' decisions.

In contrast, cash does not provide any ownership or performance-related returns, while bonds represent a loan to the issuer rather than ownership and pay interest instead of dividends. Futures are contracts to buy or sell an asset at a future date and are more concerned with price speculation rather than ownership in a company. Thus, ordinary shares are the correct answer as they directly link ownership to profit sharing in the form of dividends.

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy