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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
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