Question

Why were joint-stock companies created?

Answer 1

These companies had proven profitable in the past with trading ventures. The risk was small, and the returns were fairly quick. Granted a charter by King James I in 1606, the Virginia Company was a joint-stock company created to establish settlements in the New World.

The risk was larger as the colony might fail.

Answer 2

Explanation:

• These companies had previously proved to be profitable with business ventures.
• The risk was small, and the return was quite fast. In 1606 a charter was given by King James I, the Virginia company was a ‘joint stock company’ designed to establish the settlements in new world.
• The ‘joint-stock company’ is a business organization with many shareholders.
• The shareholder is proportionate to the ownership shareholder's share of the company.
• Therefore there is a provision of unequal ownership in the joint capital company.