Equity (finance)

In accounting and finance, equity is the residual claimant or interest of the most junior class of investors in assets, after all liabilities are paid; if liability exceeds assets, negative equity exists. In an accounting context, shareholders' equity (or stockholders' equity, shareholders' funds, shareholders' capital or similar terms) represents the remaining interest in the assets of a company, spread among individual shareholders of common or preferred stock; a negative shareholders' equity is often referred to as a positive shareholders' deficit.
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Equity investments
An equity investment generally [i.e. not always] refers to the buying and holding of shares of stock on a stock market by individuals and firms in anticipation of income from dividends and capital gains, as the value of the stock rises.
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The equities held by private individuals are often held as mutual funds or as other forms of collective investment scheme, many of which have quoted prices that are listed in financial newspapers or magazines; …
An alternative, which is usually employed by large private investors and pension funds, is to hold shares directly; in the institutional environment many clients who own portfolios have what are called segregated funds, as opposed to or in addition to the pooled mutual fund alternatives.
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Origin of the meaning
It is difficult to find out a relationship between the meaning of the word "Equity" as is currently used in the finance world and the meaning of the same word in other contexts where is generally means "justice", "impartiality" or "fairness". The best connection is perhaps the Actors' Equity Association, an American union founded in 1913 to defend the rights of Actors. In that context the word "Equity" at the beginning meant "rights" (the Association defended the rights of the actors), but then the same word started meaning "what actors had" which is the current meaning of "equity" in the finance context.

Accounting
In financial accounting, owner's equity consists of the net assets of an entity. Net assets is the difference between the total assets of the entity and all its liabilities.[1] Equity appear on the balance sheet / statement of financial position, one of the four primary financial statements.
The assets of an entity includes both tangible and intangible items, such as brand names and reputation or goodwill. The types of accounts and their description that comprise the owner's equity depend on the nature of the entity and may include:
• Share capital (common stock)
• Preferred stock
• Capital surplus
• Retained earnings
• Treasury stock
• Stock options
• Reserve[2]
Book value
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Shareholders' equity
When the owners are shareholders, the interest can be called shareholders' equity; the accounting remains the same, and it is ownership equity spread out among shareholders. ….
The individual investor is interested not only in the total changes to equity, but also in the increase or decrease in the value of his own personal share of the equity. This reconciliation of equity should be done both in total and on a per share basis.
• Equity (beginning of year)
• + net income inter net money you gained
• − dividends how much money you gained or lost so far
• +/− gain/loss from changes to the number of shares outstanding.
• = Equity (end of year) if you get more money during the year or less or not anything
Market value of shares
Equity in real estate
The notion of equity with respect to real estate comes the equity of redemption. This equity is a property right valued at the difference between the market price of the property and the amount of any mortgage or other encumbrance.