Final answer:
The statement is true; corporations obtain authorization from the state to issue stock, which represents ownership in the company. Shareholders have limited liability and may share in the profits while the corporation complies with regulations like those from the SEC.
Step-by-step explanation:
The statement that the authorization from the state to issue a certain number of shares of stock is granted through the corporations is true. When a business incorporates, it becomes a corporation that is owned by shareholders who have limited liability for the company's debts. These shareholders share in the profits (and losses) of the company. Corporations can be private or public and often raise capital for operations or new investments by selling stock or issuing bonds. Those who purchase stock become the owners, or shareholders, of the firm, and ownership is represented by shares. A company must comply with certain regulations and reporting requirements from government agencies, such as the federal Securities and Exchange Commission (SEC), which oversees the process. The process of issuing stock helps a firm increase its financial capital for expansion without the obligation of repaying this money like a traditional loan.