What Is Equity?
Equity is a term used to describe the ownership of an asset or company. It can also refer to the value of a person’s assets minus their liabilities, which is known as net worth. Equity represents the amount of money that would be returned to shareholders if all debts were paid off and any remaining assets were liquidated. In other words, equity is what remains after all liabilities have been taken into account.
In business terms, equity typically refers to stocks or shares in a company that are owned by investors who have purchased them on the stock market. These stocks represent partial ownership in the company and entitle holders to certain rights such as voting power at shareholder meetings and potential dividends from profits earned by the firm. Equity investments can provide investors with higher returns than debt investments due to their greater risk profile but they also come with more volatility since share prices tend to fluctuate significantly over time depending on how well (or poorly) companies perform financially.