What type of business is owned by individuals who purchase stock and is granted a charter by the state?

The correct answer is a corporation. A corporation is a legal entity that is separate and distinct from its owners, who are known as shareholders. These shareholders purchase stock in the corporation, which represents their ownership in the business. The corporation is established under state law through a charter, which provides it with certain rights and responsibilities. This structure allows corporations to raise capital more easily and limit the personal liability of shareholders, meaning their personal assets are generally protected from the corporation's debts and obligations.

In contrast, a partnership is an arrangement where two or more individuals share ownership and the responsibilities of running the business, but it does not involve stock or a state-issued charter in the same way. A sole proprietorship is owned by a single individual and does not require a formal charter. Limited Liability Companies (LLCs) combine elements of corporate and partnership structures, but they do not issue stock in the same manner as corporations.