Question

An American restaurant owner convinces several friends to help him pay the costs to open a second location. If the new restaurant succeeds, the owner and his friends will share the profits. If it fails, however, all of them will split the losses. This situation is most similar to which of the following?

A. The changes of prices according to supply and demand
B. The expansion of the consumer market
C. The regulation of businesses under mercantilism
D. The creation of a joint stock company

Answer 1

d joint stock company

Answer 2

The correct answer is D) The creation of a joint stock company .

This situation is most similar to the creation of a joint stock Company.

In this business association, the owner and his friends will share the profits, but if it fails, they will split the losses.

A joint-stock company is a form of business association or business entity where the shareholders buy and sell shares of the company's stock. If the Company has profits, all the shareholders split the dividends. But if the Company has losses, all the shareholders assume the loss.