What do stocks represent in a company?

Stocks represent ownership in a company, which means that when an individual buys stocks, they acquire a fractional interest in the company itself. This ownership entails certain rights, such as the right to vote on important company matters and the potential to receive dividends, which are portions of the company’s profits allocated to shareholders.

In contrast, the other options describe financial instruments that do not convey ownership. A debt obligation to lenders refers to borrowings that the company must repay, creating a liability rather than an ownership stake. Liabilities on the balance sheet represent the company's debts and obligations to others, further emphasizing that stocks are not liabilities but rather equity instruments. Finally, a loan given to the company is a means of financing, where the company owes money, contrasting with stocks that signify an investment made by equity holders. Thus, stocks clearly reflect ownership in a corporation.