eli5:Please explain to me what is meant by term “equity” , if possible also explain with the help of an easy example , i am unable to understand from google also the example there are complicated
In: Economics
Equity is basically your partial ownership of something.
So like with home equity, you take out a mortgage from your bank. The bank owns the house at first because they paid the money. But after you’ve paid back half the loan that represents you owning half the houses value. The bank still has control though, but if the house was foreclosed for some reason you get half the sale value. (Minus fees and other things that the bank makes you pay)
Things like stock are also technically equity, representing partial ownership of a company.
But the term equity tends to get used more on things that can’t be divided. Like houses or cars. Or ownership of a private company that doesn’t have stock.
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