What Equity?

Equity is widely used in all sorts of context. It's mainly referring to the assets what a person or a company owns. For example if you happen to be a shareholder then that's equity because you have a partial ownership in that firm. Also all assets not counting liabilities are considered equities. Everything is considered to a be an equity if it can be sold and gain money over it.

In broad term it stands for ownership, now there’s a difference between equity and bond the bond is a debt what the company owes you and it has to pay it off. A perfect example is with a mortgage if you own a house which current market value is £500.000 and you still have £200.000 mortgage to pay off then your equity is of £300.000. The same rules apply with stocks as well if your stocks are totally worth £80.000 and there’s still a £40.000 loan balance then the equity in stock is £40.000.