Which business structure may offer two types of stock to its investors?

• A. Sole Proprietorship
• B. Partnership
• C. C Corporation
• D. Limited Liability Company

Answer: (C)

The ability to offer more than one type of equity to investors relies on issuing stock with different classes. Only corporations issue stock to investors, and among corporate forms, a C corporation is designed to issue stock and can create multiple classes, such as common stock and preferred stock, each with distinct voting rights and dividend preferences. This structure lets investors choose different risk-reward profiles. Sole proprietorships and partnerships don’t issue stock at all, and while an LLC can have different classes of membership interests, those aren’t stock. So for offering two types of stock to investors, the C corporation is the appropriate form.