1.2 Types of business entities

Question 1

Share

Answer 1

A certificate confirming part ownership of a company. Most types of share entitle shareholders to dividends from profits

Question 2

Privately held company

Answer 2

A business that is owned by shareholders who are often members of the same family; this company cannot sell shares to the general public

Question 3

Publicly held company

Answer 3

A limited company with the legal right to sell shares to financial institutions and the general public; its share price is quoted on the national stock exchange

Question 4

Private sector

Answer 4

Comprises businesses owned and controlled by individuals or groups of individuals

Question 5

Initial public offering (IPO)

Answer 5

The process of offering for sale the shares of a privately held company to financial institutions and the general public

Question 5

Shareholders

Answer 5

Individuals or institutions that buy/own shares in a limited company

Question 6

Public sector

Answer 6

Comprises organisations accountable to and controlled by central or local government (the state)

Question 7

Mixed economy

Answer 7

Economic resources are owned and controlled by both private and public sectors

Question 8

Free-market economy

Answer 8

Economic resources are owned largely by the private sector, with very little state intervention

Question 9

Command economy