AP World History Practice Exam 2025 – The Comprehensive All-in-One Guide to Exam Success!

Joint-stock companies are businesses that allow group investment and profit sharing. This financial structure enables multiple investors to contribute capital to the company in exchange for shares of ownership. The profits and risks associated with the company are then distributed among the shareholders based on the number of shares they own. This form of organization effectively pools resources, making it easier for entrepreneurs to undertake large projects that would otherwise be too risky or costly for a single individual to manage alone.

The emergence of joint-stock companies was particularly significant during the Age of Exploration and the rise of trade in the 16th and 17th centuries. Investors could fund overseas ventures while limiting their individual risk, since ownership was shared. This model contributed to the expansion of international trade and colonization, as seen with notable companies like the British East India Company and the Dutch East India Company.