What does owning stock represent in a corporation?

Owning stock in a corporation represents shareholder equity, which signifies an ownership interest in the company. When you purchase shares, you are essentially buying a piece of the corporation, allowing you to participate in its growth and profits. This ownership comes with rights, such as voting on important corporate matters and receiving dividends when the company performs well.

Shareholder equity is an essential component of a company's balance sheet and reflects the value that shareholders collectively have in the company after all liabilities are deducted from the total assets. Unlike debt obligations, which represent borrowed money that needs to be repaid, or fixed income investments that provide regular interest payments, owning stock gives shareholders a direct stake in the corporation's performance and potential appreciation of the stock's value. This is why the correct answer is shareholder equity.