Final answer:
The return to the investor is not the cost to the seller; it is false. Companies raise funds through IPOs and subsequent sales, but post-IPO trading between investors doesn't affect the company's costs. Returns can be from dividends or capital gains, and a board of directors oversees decision-making in shareholder-owned companies.
Step-by-step explanation:
The statement that the return to the investor is the cost to the seller is false. When an investor receives a return on investment, this does not necessarily correspond to a cost to the seller. A company, for instance, raises capital through an initial public offering (IPO), and the money from the sale of its stock goes to the company or early-stage investors such as venture capital firms. After an IPO, when stocks are traded among investors, the seller incurs no cost when an investor makes a profit because the transaction occurs between investors on the secondary market.
A company promises a rate of return to its investors, which can be in the form of dividends or capital gains from the appreciation of the stock's value. The decision-making in a company with a large number of shareholders is typically handled by a board of directors elected by the shareholders.