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The term's meaning depends very much on the context. In finance, in general, you can think of equity as ownership in any asset after all debts associated with that asset are paid off
- A stock or any other security representing an ownership interest.
- On a company's balance sheet, the amount of the funds contributed by the owners (the stockholders) plus the retained earning (or losses). Also referred to as "shareholders equity"
- In the context of margin of trading, the value of securities in a margin account minus what has been borrowed from the brokerage.
- In the context of real estate, the difference between the current market value of the property and the amount the owner still owes on the mortgage. It is the amount that the owner would receive after selling a property and paying off the mortgage.
- In term of investment strategies, equity (stock) is one of the principal asset classes. The other two are fixed-income (bonds) and cash/cash-equivalents. These are used in asset allocation planning to structure a desired risk and return profile for an investor's portfolio.
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