Future Business Leaders of America (FBLA) Agribusiness Practice Test

Which type of corporation has its stocks traded on stock exchanges?

1. Private corporation

2. Publicly held corporation

3. Nonprofit corporation

4. Small business corporation

The correct answer is: Publicly held corporation

A publicly held corporation is one where the shares of stock are offered to the general public and traded on stock exchanges. This status allows for greater liquidity as shares can be bought and sold easily in the open market, providing flexibility and an opportunity for significant capital growth. Publicly held corporations are regulated by government agencies and must adhere to strict rules regarding reporting and disclosure, which informs investors about the company's performance and financial health. In contrast, a private corporation does not trade its stocks on public exchanges and typically has fewer shareholders. Nonprofit corporations focus on a mission rather than generating profit for owners or shareholders and do not have stock traded. Small business corporations can be privately held and usually don’t engage in trading their stock publicly, reflecting more localized operations. Understanding these distinctions helps clarify the operational and regulatory frameworks that govern different types of corporations.