Financial Industry Regulatory Authority (FINRA) Practice Exam 2025 - Free FINRA Practice Questions and Study Guide

The net worth of a company, often referred to as shareholders' equity, represents the residual interest in the assets of the company after deducting liabilities. This equity fundamentally belongs to the stockholders, who are the owners of the corporation.

Stockholders invest their capital into the company with the expectation of benefiting from its growth and profitability. The net worth reflects the value that stockholders will ultimately receive in the form of dividends or as appreciation in the share price. As such, stockholders have a direct claim on the net assets of the company, unlike other parties such as creditors or employees, who have claims based on contractual agreements or employment arrangements rather than ownership.

In contrast, the president and CEO, bondholders, and board of directors play different roles within the company's structure but do not hold ownership over its net worth. The president and CEO may manage the company and make decisions regarding its operations, while the board of directors oversees management on behalf of the shareholders. Bondholders act as creditors and hold debt instruments that must be repaid, so they do not have ownership stakes in the company.