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

Ports, toll-roads, airports and other infrastructure assets generally don’t generate the outsize returns that are expected from more typical private-equity investments. Ben Dummett, WSJ, "Group Readies $1.1 Billion Bid for Poland’s Deep-Water Port Terminal," 18 Mar. 2019 Honda will devote $2 billion to the effort over 12 years, which, together with a $750 million equity investment in Cruise, brings the total commitment to $2.75 billion. Recode Staff, Recode, "Recode Daily: Did Chinese spies infiltrate Apple and Amazon with tiny chips?," 4 Oct. 2018 Honda will devote $2 billion to the effort over 12 years, which, together with a $750 million equity investment in Cruise, brings the total commitment to $2.75 billion. Andrew J. Hawkins, The Verge, "GM’s Cruise will get $2.75 billion from Honda to build a new self-driving car," 3 Oct. 2018 The Enquirer/Meg Vogel & Carrie Cochran Bengals fans won't appreciate this, but an analysis of NFL fandom shared annually by Michael Lewis known as Fanalytics ranks fans of the Cincinnati Bengals 26th of 32 overall, and 27th in fan equity. Dave Clark, Cincinnati.com, "NFL Fan and Brand Report 2018 ranks Bengals 26th," 26 June 2018 The new fund will invest not just in traditional equities, but in digital tokens as well. Klint Finley, WIRED, "Andreessen Horowitz Lends Credence to Crypto With New Fund," 25 June 2018 Owners nationwide gained an average $16,300 in equity for the year and presumably far more in expensive, fast-appreciating neighborhoods. Kenneth R. Harney, courant.com, "Doomsday Predictions On Tax Cuts Have Not Come True — Yet," 14 June 2018 Securities class actions are a unique U.S. invention that continue to make our public equity market uncompetitive with global and private markets. Hal Scott, WSJ, "The SEC’s Misguided Attack on Shareholder Arbitration," 22 Feb. 2019 Société Générale recently agreed to acquire Commerzbank’s equity-markets and commodities unit for an undisclosed sum. The Economist, "Why the euro zone hasn’t seen more cross-border bank mergers," 12 July 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

15 Apr 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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