Equity means an ownership stake in an investment expressed as a fraction of the total ownership. For example, if a business has 10 ownership shares total and you buy one, your equity in the business is 10 percent. In a public corporation, equity owners – that is, stockholders – get to share the profits of the business. A business can pay its profits to the equity stockholders as dividends, or it can keep the profits to grow bigger, trying to make each share of stock worth more.
Related Articles: