BREAKING DOWN 'Equity ' Equity can have somewhat different meanings, depending on the context and the asset type. In finance, you can think of equity as one’s degree of ownership in any asset after subtracting all debts associated with that asset. For example, a car or house with no outstanding debt is entirely the owner's equity because he or she can readily sell the item for cash and pocket the resulting proceeds. Stocks are equity because they represent ownership in a firm, even though ownership of shares in a public company rarely come with accompanying liabilities.
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