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I'd really like someone explaim me this English term.

One sense of the word seems to be the part of an investment not loaned but coming from the own pocket, e.g. what translates literally from German or Hungarian as 'own capital'.

But elsewhere, it is used to mean the balance of assets and debts. And then there are "equity markets". It appears to me there must be multiple senses of the word. And the more sources I read, the more confused I become.

So, could someone please boil it down to something clear?

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Sat Oct 11th, 2008 at 07:48:04 AM EST
[ Parent ]
I can help a bit... but not completely:

  1. Equity can mean a holding of "shares" or "stock" in a company.

  2. Thus... it is one of the sources of funding for a company. Another would be debt. In a small company this equity might have come out of your own pocket, but in a larger one it might have come from selling shares.

In accounting land, if you take the assets of the company and subtract the debts, what is left is the "equity value" as if you sold the assets, you'd pay the debt and what is left would be distributed amongst the shareholders.

"Equity markets" are places you buy and sell shares... e.g. the London Stock Exchange.

by Metatone (metatone [a|t] gmail (dot) com) on Sat Oct 11th, 2008 at 08:55:53 AM EST
[ Parent ]
in a small company this equity might have come out of your own pocket, but in a larger one it might have come from selling shares.

It might help to consider that all companies have shares, even companies not listed on the stock exchange. The money the entrepeneur(s) take from her own pocket gives her (all) the shares in the company, that is, the entrepeneut have sold all the shares to herself.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid (arvid.hallen at gmail.com) on Sat Oct 11th, 2008 at 09:12:43 AM EST
[ Parent ]
Ah, thanks, now I see the logic behind the different meanings...

To underline how unfamiliar this is for me, here are the same concepts in German -- each has a different word root (the same is true in Hungarian but no one would recognise those...):

  • equity as own capital = Eigenkapital,
  • equity share = Stammaktie,
  • equity value as the balance of assets and debts = Reinvermögen,
  • equity market = Aktienmarkt.


*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sat Oct 11th, 2008 at 09:17:06 AM EST
[ Parent ]
It is a term that refers to a concept encompassing ideals of fairness and/or equality. Specifically, it is often used to describe the ideal of valuing all humans as equal to each other.

(ducks for cover)

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Sat Oct 11th, 2008 at 10:25:12 AM EST
[ Parent ]
My impression is that it is used to discharged the "humans should be in a similar situation" semantics of "equality", a meaning that threatens the hierarchies and very unequal distribution of goods in our society, and replace it with "everyone should be treated according to the same rules", a much less potent idea, that was already adopted by the liberal democracies of the mid 19th century, and that doesn't prevent gross inequalities - in fact it is perfectly compatible with, say, modern finance.

Equity means your dollar has as much say as other people's dollars in how a company is run...

Un roi sans divertissement est un homme plein de misères

by linca (antonin POINT lucas AROBASE gmail.com) on Sat Oct 11th, 2008 at 11:14:19 AM EST
[ Parent ]
i thought it was what your assets are supposed to be worth.

as in....people tapped into the equity of their houses, borrowing money against their supposed worth.

~"When an inner situation is not made conscious, it appears outside as fate." Karl Jung~

by melo (melometa4(at)gmail.com) on Sat Oct 11th, 2008 at 12:27:43 PM EST
[ Parent ]
You can use the word that way, provided you remember to substract the debt.
Which is why many people now have negative equity in their house.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi
by Cyrille (cyrillev domain yahoo.fr) on Sat Oct 11th, 2008 at 01:34:38 PM EST
[ Parent ]

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