Ownership interest in a firm. Also, the residual dollar value of a futures trading account. assuming its liquidation is at the going trade price. In real estate. dollar difference between what a property could be sold for and debts claimed against it. In a brokerage account. equity equals the value of the account’s securities minus any debit balance in a margin account. Equity is also shorthand for stock market investments .
Ownership. Equity is what a person, company, or account has to its name if all debts were liquidated. Because of this, it is an alternate term for a stock. Equity is important to accounting. trading. among others.
1. In a brokerage account, the market value of securities minus the amount borrowed. Equity is particularly important for margin accounts, for which minimum standards must be met.
2. Stock, both common and preferred. For example, an investor may prefer investing in equities instead of in bonds. Also called equity security .
3. In accounting, funds contributed by stockholders through direct payment and through retained earnings. See also owners’ equity .
In the broadest sense, equity gives you ownership. If you own stock, you have equity in, or own a portion — however small — of the company that issued the stock.
Having equity is the opposite of owning a bond or commercial paper, which is a debt the company must repay to you.
Equity also refers to the difference between an asset’s current market value — the amount it could be sold for — and any debt or claim against it. For example, if you own a home currently valued at $300,000 but still owe $200,000 on your mortgage, your equity in the home is $100,000.
The same is true if you own stock in a margin account. The stock may be worth $50,000 in the marketplace, but if you have a loan balance of $20,000 in your margin account because you financed the purchase, your equity in the stock is $30,000.
ordinary shareholders funds, that is, their ORDINARY SHARE capital subscribed plus any RESERVES or ploughed-back profit. Alternatively, equity can be regarded as what would be left to the ordinary shareholders of a company after all the company s debts and liabilities have been met.
a FINANCIAL SECURITY issued to those individuals and institutions who provide long-term finance for JOINT-STOCK COMPANIES. Ordinary SHAREHOLDERS are entitled to any net profits made by their company after all expenses (including interest charges and tax) have been paid, and they generally receive some or all of these profits in the form of DIVIDENDS. In the event of the company being wound up (see INSOLVENCY ), they are entitled to any remaining ASSETS of the business after all debts and the claims of PREFERENCE SHAREHOLDERS have been discharged. Ordinary shareholders generally have voting rights at company ANNUAL GENERAL MEETINGS. which depend upon the number of shares that they hold. See also SHARE CAPITAL.
(1) The difference between the value of a property and the mortgage debt on it is said to be the equity. Under federal law, when one’s equity in property reaches 22 percent of the value of the property—when the mortgage has been reduced to 78 percent of the value of the property—then private mortgage insurance is supposed to be automatically cancelled if it is in place.(2) The ability of a court to do what’s fair under the circumstances, without regard to many of the technical requirements of the law.Because real estate has always enjoyed a protected status in the courts,it is usually easier to obtain equitable relief when real property is involved.As an example,in a boundary line dispute there might be no legal theory to find in favor of a property owner who accidentally builds part of his house on his neighbor’s land.Nevertheless,almost no court will require the property owner to tear down the encroaching part of the house.Instead,the court will usually “do equity”and require the landowner to sell,and the house owner to buy,the small amount of land necessary to fix the problem.
In connection with a home, the value of the home less the balance of outstanding mortgage loans on the home.
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References in periodicals archive ?
This Statement was developed in response to concerns expressed by preparers, auditors, regulators, investors, and other users of financial statements about issuers’ classification in the statement of financial position of certain financial instruments that have characteristics of both liabilities and equity but that have been presented either entirely as equity or between the liabilities section and the equity section of the statement of financial position.
Private equity firms are also targeting specialized markets and consolidating regional businesses to form national enterprises.
11, 2001, terrorist attacks, private equity invested billions into the Bermuda market to finance new property/casualty efforts.
It received the NMTC investor’s equity contribution and borrowed additional funds from a third-party lender on a nonrecourse basis.
5) Any other affiliate that engages in significant equity investment activities that are subject to a special capital charge under the capital adequacy rules or guidelines of the Board.
To win the private equity game, you first need to know the rules.
For starters, the pool of available equity capital has grown substantially in recent years to roughly $100 billion, according to the Federal Reserve, as pension funds and banks such as Chemical Bank, Bank of Boston, and Bank America now are joining the traditional ranks of insurance companies, “buy-out” firms, and wealthy individuals who use private equity investments to reap higher returns.
A recent private letter ruling, (14) however, does support, by implication, the equity status of CAPs.
On average, the next two to five years will see Japanese investors’ increase their allocation to private equity by more than three times.
Moreover, this new merchant banking authority is in addition to–and does not replace–the authority that bank holding companies have under other provisions of the Bank Holding Company Act to engage in equity investment activities.
As funds flow from longer duration assets into shorter duration assets and are consumed, it seems logical that there would be an impact on the equity market – specifically, upward pressure on equity risk premium.
MIPS have been a major source of aggravation for the IRS; since MIPS and similar hybrid securities were first approved as equity for balance sheet purposes, taxpayers have issued an estimated $30 billion in MIPS.