Equity
What Is Equity?
Equity represents ownership in a company. When you buy shares of a company, you become a part-owner of that business, entitled to a share of its profits and having a claim on its assets.
Key Features of Equity
- Ownership – Shareholders are part-owners of the company.
- Returns – Earned through dividends (share of profits) and capital gains (when the share price rises).
- Risk & Reward – Higher potential returns compared to debt instruments, but also higher risk.
- Voting Rights – Equity shareholders often have the right to vote on important company matters.
- Market Value – The value of equity changes daily based on supply, demand, and company performance.
Example
- Buying 100 shares of Reliance Industries makes you an equity shareholder of Reliance, with ownership proportional to the number of shares held.
