Today, in this Article we’ll know the answer to these questions. So read this short article attentively so that you can understand what is an Equity? 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, here we can say that the 100% ownership or equity is among the company’s founders of which total value is 10 crore rs Since there are 5 founders of the company, so everyone will have 20% equity.
Now suppose, after some time they needed 5 crore rs for the company’s development For this, the founders sold 50% equity (50 lac shares) of the company in IPO and raised total 5 crore rs form public Now, we can see here that the company sold 50 lac shares which were equal to 50% equity of the company This means that the company sold 1% equity on per 1 lac shares in the IPO If we buy 1 lac shares of this company then we will buy 1% equity of this company and we will have 1% ownership of this company So in investing the equity indicates nothing but the ownership of a company a company sells its equity to the public by dividing it into shares.
An investor will have as much equity 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 when we buy stocks of a company, we buy equity in that company.
So friends, this was our today’s short Article on Equity. Today we learned, What is the meaning of equity in investing If you liked the article then please share it so that everyone can learn about stock market If you have any question regarding this article, you can write it down in the comment box. We will answer your questions. Keep Visiting sipcalculator.org.in so that you don’t miss our upcoming informative posts. Thank you friends, for visiting our site. Take care!