eli5 What is equity?
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Equity has several meanings when it comes to accounting, but generally it means value of ownership.
Often you will hear people talk about how much equity they have in their house. If you have a $500k house and $300k mortgage, then you have $200k of equity. That means if you sell the house, that’s how much money you’d get in your pocket.
If you own shares of a company, that’s called shareholders’ equity. It’s the value of the slice of the company that you own.
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