What type of stock represents investments made by stockholders into the business?

Common stock represents investments made by stockholders into the business. When individuals purchase common stock, they are essentially contributing capital to the company in exchange for partial ownership. This ownership typically comes with voting rights in company decisions and the potential to receive dividends, which can be paid depending on the company's profitability and the decisions made by its board of directors.

Common stockholders are considered the last in line when it comes to asset distribution in the event of liquidation, after debts and preferred stockholders have been paid off. This type of stock reflects the direct equity stake that shareholders have in the company, illustrating their financial investment and their confidence in the firm's ability to grow and generate profits.

In contrast, preferred stock, while also a form of equity, typically has different rights and priority over common stock in terms of dividend payments and asset distribution, making it a distinct investment. Bonds represent debt, meaning investors are lending money to the company rather than purchasing an ownership stake, while retained earnings refer to the portion of profits that a company retains for reinvestment rather than distributing as dividends. Thus, common stock is the correct answer for representing investments made by stockholders into the business.