1. Stock or any other security representing an ownership
interest.
2. On the balance sheet, the amount of the funds contributed by
the owners (the stockholders) plus the retained earnings (or
losses). Also referred to as "shareholder's equity".
3. In the context of margin trading, the value of securities in
a margin account minus what has been borrowed from the brokerage.
4. In the context of real estate, the difference between the
current market value of the property and the amount the owner
still owes on the mortgage. Thus, it is the amount, if any, the
owner would receive after selling a property and paying off the
mortgage.
a
Notes:
Equity is a term whose meaning depends very much on the context.
In general, you can think of equity as ownership in any asset
after all debts associated with that asset are paid off. For
example, a car or house with no outstanding debt is considered the
owner's equity since he or she can readily sell the items for
cash. Stocks are equity because they represent ownership of a
company, whereas bonds are classified as debt because they
represent an obligation to pay and not ownership of assets.
