Why did governments authorize the creation of joint-stock companies?

to stop shareholders from buying stocks

Explanation:

Joint-stock companies is a for-profit company model, characterized by having its financial capital divided by stock. The owners of the stock are called shareholders and in this case the company must always have two or more shareholders.

Private limited joint-stock companies do not allow their stocks to be available for trading on the stock exchange market, for example. The resources are limited only among the shareholders, that is, the partners of the company. For this reason, governments allow the creation of such a company, to prevent shareholders from buying stocks.

The correct answer is C) to limit the possibility of risk from trade.

Governments authorized the creation of joint-stock companies because it limited the possibility of risk from trade.

The join-stock company was authorized for the companies to establish trade in other lands, as was the case of the Virginia-London Company that sponsored the trip of English colonists to the Americas. These people founded the colony of Jamestown, Virginia in 1606, with the simple purpose of generating profits and be rich. We could say that these joint-stock companies were the beginning of what we know today as corporations. Investors provided money at moderated risks and the interests help them to recover the initial investment plus a profit.

The other options of the question were A) to stop shareholders from buying stocks. B) to allow their colonies to make money D) to prevent a positive balance of trade.

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