What is the meaning of “Equity” in the Stock Market?
Today, in this post we’ll know the answer to these questions. So read this post attentively so that you can understand what is Equity?
Hello friends, Welcome to our website which is based on Investment Education. If you’re interested in investing or want to learn it then do visit our website Let’s know what is an Equity
Friends, the meaning of Equity is “An ownership of any business” We know that to buy shares of a company means buying a small part of that company and in the language of investing, we call this small part an Equity We can say that we buy Equity in a company by purchasing shares of that company Let’s understand this by an example Suppose, 5 friends started a company together All five of them invested 2 Crore rs each and started the company with 10 crore rs During the company’s legal registration, they divided the company into 1 crore shares Furthermore they decided that everyone will work equally for the company and thus they divided the partnership of the company equally among them In this way, every founder of the company gets 20 lac shares from 1 crore shares So friends here we will say that 100% ownership or equity of the company is with the founder of the company. The total value of which is currently Rs 10 crore. Since there are 5 founders of the company, so everyone will have 20% equity Now let us assume that after some time, they needed 5 crore rs for the company’s development For this, the founders sold 50% equity of the company in an IPO and raised a total of Rs 5 crore from the public. Now, friends, we can see here that the company sold 50 lakh shares in the IPO which was equal to the total 50% equity of the company. This means that the company sold its 1% equity in every 1 lakh shares in the IPO. If we buy 1 lakh shares of this company, then we will buy 1% equity in this company. And we will own 1% of this company. So, in investing the equity indicates nothing but the ownership of a company Companies divide their equity into shares and sell them to the public. An investor will have as much equity of a company as many shares he/she buys This is the reason why often Stock Market is called Equity Market Stock Investing is called Equity Investing and Stock Trading is called Equity Trading Always keep in mind that whenever we buy stocks of a company we buy equity in that company
So friends, this was our today’s post on Equity Today we learned in this post what does equity mean in investing? If you liked this post, please share this post so that everyone can learn about the stock market. If you want to ask any questions about this post, write it in the comment box below.
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