eli5 What is equity?
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It’s ownership stake of an asset. You most commonly hear about equity w/ regard to homes. Say you bought a home that is worth $400k. You currently owe $250k on the mortgage, meaning the other $150k in home value is your current equity. If you sold today for $400k, you’d get the $150k while owing the other $250k to the lender.
The term can also be used to mean the value of shares of stock you own, or a percentage ownership of a business, etc. Like if you started a business with 3 other partners and split the company evenly, you’d own a 25% equity stake in the company.
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