eq·​ui·​ty | \ˈe-kwə-tē \
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

Winfrey made an equity investment in True Food and will join the board of directors, helping the brand continue to expand across the U.S., the company announced. Kellie Hwang, azcentral, "Oprah invests in True Food Kitchen, former Sam Fox restaurant that started in Phoenix," 11 July 2018 New rounds of debt or equity investment will be needed for that, analysts agree. Russ Mitchell, latimes.com, "Tesla drops reservation system, opens Model 3 orders to anybody," 10 July 2018 Gaudreau buys stake in USHL team Calgary Flames star forward Johnny Gaudreau was among the NHL-laden ownership group, Saints4Life Acquistions, that purchased an equity stake in the US Hockey League’s Dubuque Fighting Saints on Thursday. BostonGlobe.com, "Ex-Ohio State doctor accused of sexual misconduct was Harvard fellow," 22 June 2018 But a different story is unfolding in Southeast Asia where, over the last several years, Alibaba and Tencent have spent billions of dollars to secure major equity stakes in the region’s leading tech startups. Eamon Barrett, Fortune, "Alibaba v. Tencent: Taking the Fight to Southeast Asia," 21 June 2018 What’s important here: The entire point of Tidal was that the streaming service would take on Spotify by offering exclusive music from artists like Jay-Z and other musicians who had equity stakes in the company. Peter Kafka, Recode, "You can listen to the new Beyonce and Jay-Z album on Spotify and Apple Music now," 18 June 2018 One of the event's sponsors was MoviePass, the controversial movie subscription service that took an equity stake in Gotti in late April that's valued in the low seven-figure range (a MoviePass logo promptly appeared on Travolta's private plane). Pamela Mcclintock, The Hollywood Reporter, "'Gotti': How John Travolta Tried — and Failed — to Save His Passion Project," 18 June 2018 A+E Networks, which holds an equity stake in the NWSL, has broadcast an afternoon NWSL Game of the Week on Lifetime every Saturday since the beginning of the 2017 season. Jamie Goldberg, OregonLive.com, "NWSL hopes moving games to evening slot on ESPNews will boost attendance, ensure player safety," 6 June 2018 Tech incubators have long existed to provide funding and support for up-and-coming start-ups in exchange for an equity stake. Tracey Lien, latimes.com, "Snap Inc. launches accelerator program to invest in media start-ups," 23 May 2018

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

11 Nov 2018

Look-up Popularity

Time Traveler for equity

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

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More Definitions for equity



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



English Language Learners Definition of equity

: fairness or justice in the way people are treated

finance : 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


eq·​ui·​ty | \ˈe-kwə-tē \
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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