Final answer:
Corporations issue shares of stock to shareholders, which represent partial ownership and can be traded independently. This facilitates capital raising for the corporation while limiting shareholders' liability to their investment.
Step-by-step explanation:
Corporations issue shares of stock to shareholders, and these shares can be sold or traded to other people without causing the termination of the corporation.
Stock represents firm ownership; thus, those who buy the stock become the firm's owners, or shareholders.
This system allows corporations to raise funds to finance their operations or new investments.
While shareholders have limited liability for the company's debts, they partake in the profits and losses.
Moreover, the sale of stocks and bonds enabled ordinary Americans to share in the profits of corporate America, especially since the mid- to late twentieth century.