Equity (redirected from Equity capital)

Equity

Ownership interest in a firm. Also, the residual dollar value of a futures trading account, assuming its liquidation is at the going trade price. In real estate, dollar difference between what a property could be sold for and debts claimed against it. In a brokerage account, equity equals the value of the account's securities minus any debit balance in a margin account. Equity is also shorthand for stock market investments.

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equity

1. In a brokerage account, the market value of securities minus the amount borrowed. Equity is particularly important for margin accounts, for which minimum standards must be met.

2. Stock, both common and preferred. For example, an investor may prefer investing in equities instead of in bonds. Also called equity security.

3. In accounting, funds contributed by stockholders through direct payment and through retained earnings. See also owners' equity.

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Equity

Ownership. Equity is what a person, company, or account has to its name if all debts were liquidated. Because of this, it is an alternate term for a stock. Equity is important to accounting, trading, among others.

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Equity. 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.