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In the broadest sense, equity gives you ownership. If you own stock, you have equity in, or own a portion -- however small -- of the company that issued the stock.
Having equity is the opposite of owning a bond or commercial paper, which is a debt the company must repay to you.
Equity also refers to the difference between an asset's current market value -- the amount it could be sold for -- and any debt or claim against it. For example, if you own a home currently valued at $300,000 but still owe $200,000 on your mortgage, your equity in the home is $100,000.
The same is true if you own stock in a margin account. The stock may be worth $50,000 in the marketplace, but if you have a loan balance of $20,000 in your margin account because you financed the purchase, your equity in the stock is $30,000.
equityordinary shareholders' funds, that is, their ORDINARY SHARE capital subscribed plus any RESERVES or ploughed-back profit. Alternatively, equity can be regarded as what would be left to the ordinary shareholders of a company after all the company's debts and liabilities have been met.
equitya FINANCIAL SECURITY issued to those individuals and institutions who provide long-term finance for JOINT-STOCK COMPANIES. Ordinary SHAREHOLDERS are entitled to any net profits made by their company after all expenses (including interest charges and tax) have been paid, and they generally receive some or all of these profits in the form of DIVIDENDS. In the event of the company being wound up (see INSOLVENCY), they are entitled to any remaining ASSETS of the business after all debts and the claims of PREFERENCE SHAREHOLDERS have been discharged. Ordinary shareholders generally have voting rights at company ANNUAL GENERAL MEETINGS, which depend upon the number of shares that they hold. See also SHARE CAPITAL.
(1) The difference between the value of a property and the mortgage debt on it is said to be the equity. Under federal law, when one's equity in property reaches 22 percent of the value of the property—when the mortgage has been reduced to 78 percent of the value of the property—then private mortgage insurance is supposed to be automatically cancelled if it is in place.(2) The ability of a court to do what's fair under the circumstances, without regard to many of the technical requirements of the law.Because real estate has always enjoyed a protected status in the courts,it is usually easier to obtain equitable relief when real property is involved.As an example,in a boundary line dispute there might be no legal theory to find in favor of a property owner who accidentally builds part of his house on his neighbor's land.Nevertheless,almost no court will require the property owner to tear down the encroaching part of the house.Instead,the court will usually “do equity”and require the landowner to sell,and the house owner to buy,the small amount of land necessary to fix the problem.
In connection with a home, the value of the home less the balance of outstanding mortgage loans on the home.