Which statement is true about private companies?

Which statement is true about private companies?

• A. They do not have shares issued to the public and have fewer shareholders.
• B. They always have more employees
• C. They cannot raise capital
• D. They are government-owned

Answer: (A)

Private companies are defined by not issuing shares to the public and having a small number of shareholders. Because their shares aren’t traded on a public stock exchange, ownership remains with a limited group—such as founders, family, or private investors. They can still raise capital, but through private placements or debt, not via public markets. This makes the statement true. The other options aren’t reliable: private companies can vary widely in size and headcount, they can and do raise capital through private means, and they are not inherently government-owned.

Private companies are defined by not issuing shares to the public and having a small number of shareholders. Because their shares aren’t traded on a public stock exchange, ownership remains with a limited group—such as founders, family, or private investors. They can still raise capital, but through private placements or debt, not via public markets. This makes the statement true. The other options aren’t reliable: private companies can vary widely in size and headcount, they can and do raise capital through private means, and they are not inherently government-owned.