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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.
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