equity

noun
eq·​ui·​ty | \ ˈe-kwə-tē How to pronounce equity (audio) \
plural equities

Definition of equity

1a : justice according to natural law or right specifically : freedom from bias or favoritism
b : something that is equitable
2a : the money value of a property or of an interest in a property in excess of claims or liens against it
b : the common stock of a corporation
c : a risk interest or ownership right in property
d : a right, claim, or interest existing or valid in equity
3a : a system of law originating in the English chancery and comprising a settled and formal body of legal and procedural rules and doctrines that supplement, aid, or override common and statute law and are designed to protect rights and enforce duties fixed by substantive law
b : trial or remedial justice under or by the rules and doctrines of equity
c : a body of legal doctrines and rules developed to enlarge, supplement, or override a narrow rigid system of law

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Examples of equity in a Sentence

In making these decisions we should be governed by the principle of equity. We've been slowly paying off our mortgage and building up equity in our house.

Recent Examples on the Web

Faced with uncertainty, the go-to market for equity investors is America’s. The Economist, "Six charts that explain the state of markets," 17 Aug. 2019 This also could entail seeking equity is smaller start-up companies by contributing your time and skill set as an advisor (if possible). NBC News, "Millennials are determined to retire early. Here's how they can actually pull it off.," 16 Aug. 2019 The good news is that in a growing number of states and cities, that question is now banned — often prohibited as part of new pay equity laws and designed to help close the pay gap by stopping new salaries from being set off past ones. Jena Mcgregor, Washington Post, "More states are banning questions about salary history in job interviews. What to say if you’re asked about it anyways.," 15 Aug. 2019 The committee will review results and make recommendations to Lemon Grove City Manager Lydia Romero on equity adjustments. San Diego Union-Tribune, "Lemon Grove firefighters, city reach agreement on new contract," 15 Aug. 2019 Central banks could embark on emergency interest rate cuts and reintroduce quantitative easing programs to force more cash into equities again. Sven Henrich For Cnn Business Perspectives, CNN, "A global recession may be coming a lot sooner than anyone thought," 15 Aug. 2019 Kindle Betz, members of her family, and St. Louis FC owner Jim Kavanaugh emerged from the ashes of a bid fronted by Paul Edgerley, a private equity investor based in Boston. Brian Straus, SI.com, "Source: St. Louis Will Be Awarded an MLS Expansion Franchise Next Week," 14 Aug. 2019 As one of the world’s largest owners of metal companies, Deripaska’s equities are as close-by as Ukraine or as far flung as Africa. Sam Patten, WIRED, "Kostya and Me: How Sam Patten Got Ensnared in Mueller’s Probe," 14 Aug. 2019 Koen also served as vice-chair of the Board of Trustees for the Denver Foundation, an $820 million community foundation and, chaired its work around racial equity. Mark Curnutte, Cincinnati.com, "New president: Local Urban League hires Denver United Way executive," 13 Aug. 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'equity.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of equity

14th century, in the meaning defined at sense 1a

History and Etymology for equity

Middle English equite, from Anglo-French equité, from Latin aequitat-, aequitas, from aequus equal, fair

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Statistics for equity

Last Updated

19 Aug 2019

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Time Traveler for equity

The first known use of equity was in the 14th century

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More Definitions for equity

equity

noun

Financial Definition of equity

What It Is

Put simply, equity is ownership.

In the trading world, equity refers to stock. In the accounting and corporate lending world, equity (or more commonly, shareholders’ equity) refers to the amount of capital contributed by the owners or the difference between a company’s total assets and its total liabilities.

In the real estate world, equity refers to the difference between an asset’s market value and the debt owed on the asset.

How It Works

The two most common types of equities traders encounter are common stock and preferred stock. Share certificates bearing the name of the shareholder, the number of shares, and the name of the company represent these equities, or shares. The number of shares a corporation is authorized to issue is outlined in its corporate charter. When a company decides to sell additional shares to new or existing shareholders, this is sometimes called raising equity.

Although shareholder rights vary by company, one of the most prominent characteristics of equity is that it entitles the owner to vote on certain matters and to do so in proportion to the number of shares he or she owns. The company’s articles of incorporation and bylaws determine the number of votes each share is entitled to.

As you can see in the sample balance sheet for XYZ Company, equity is generally broken out into the par value of the shares outstanding, any additional paid in capital, and any earnings retained by the company.

Why It Matters

Equity holders enjoy voting rights and other privileges that only come with ownership, because equity represents a claim on a proportionate share of a company’s assets and earnings. These claims are generally subordinate to lenders’ claims, but only equity holders can truly participate in and benefit from growth in the value of the enterprise.

Some financial instruments have equity characteristics but are not actually equity. Convertible debt instruments, for example, represent loans that convert into shares when a company (the borrower) crosses certain thresholds, thereby turning a lender into an owner in certain events. Stock options also act like equity in that their value changes with the value of the underlying shares, but the option holders generally do not have voting rights and are not eligible to receive the dividends or other distributions made to bona fide equity holders.

It is important to understand that although balance sheet equity represents the company’s net worth, the company’s shares are ultimately worth only what buyers are willing to pay for them.

Source: Investing Answers

equity

noun

English Language Learners Definition of equity

formal : fairness or justice in the way people are treated
: the value of a piece of property (such as a house) after any debts that remain to be paid for it (such as the amount of a mortgage) have been subtracted
: a share in a company : a share of a company's stock

equity

noun
eq·​ui·​ty | \ ˈe-kwə-tē How to pronounce equity (audio) \
plural equities

Legal Definition of equity

1a : justice according to fairness especially as distinguished from mechanical application of rules prompted by considerations of equity comity between nations, and equity require it to be paid for— F. A. Magruder
b : something that is equitable : an instance of equity the inequities produced by the system are outnumbered by the equities
2a : a system of law originating in the English chancery and comprising a settled and formal body of substantive and procedural rules and doctrines that supplement, aid, or override common and statutory law the judicial power shall extend to all cases, in law and equity, arising under this ConstitutionU.S. Constitution art. III — see also chancery — compare common law, law

Note: The courts of equity arose in England from a need to provide relief for claims that did not conform to the writ system existing in the courts of law. Originally, the courts of equity exercised great discretion in fashioning remedies. Over time, they established precedents, rules, and doctrines of their own that were distinct from those used in the courts of law. Although for a time the courts of equity rivaled the law courts in power, the law courts maintained an advantage partly as a result of forcing the equity courts to hear only those cases for which there was no adequate remedy at law. The courts of law and equity were united in England in 1873. Courts of equity also developed in the United States, but in most states and in the federal system courts of law and courts of equity have been joined. The courts apply both legal and equitable principles and offer both legal and equitable relief, although generally equitable relief is still granted when there is no adequate remedy at law.

b : the principles that developed in the courts of equity : justice in accordance with equity equity treats a devisee who procures a will by fraud as a constructive trustee— W. M. McGovern, Jr. et al. also : justice in accordance with natural law
c : a court of equity sat alone for some time in equity— O. W. Holmes, Jr.
3 : a body of doctrines and rules developed to enlarge, supplement, or override any narrow or rigid system of law
4a : a right, claim, or interest existing or valid in equity
b : the money value of a property or of an interest in property in excess of any claims or liens (as mortgage indebtedness) against it
c : a risk interest or ownership right in property specifically : the ownership interests of shareholders in a company
d : the common stock of a corporation — compare asset, debt

History and Etymology for equity

Latin aequitat- aequitas fairness, justice, from aequus equal, fair

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