Equities, or stocks, are units of ownership of a business or company after all liabilities have been paid. Stocks are referred to as equities because the shareholder of a stock owns equity in the company. A company that wishes to raise capital can issue shares of equity to the public market and allow investors to buy shares. Such shares of equity will have a unit value which is determined before the sale becomes public. Shares are usually sold in bulk and are traded at the stock exchange. The market value for these stocks will rise and fall in the form of the stock price. Any investors can purchase shares of a public company in the stock market using a stock broker or online trading platform.
While stocks can be defined as an ownership unit of a company, all it represents is a share of the company's financial performance and assets. Some stocks come with certain rights including voting privileges during election of company directors and passing of important resolutions such as approval of declared dividends, rights issue and other important company matters.
Equities and the Stock Market
The stock market is where companies, investors and financial professionals can trade assets like stocks, bonds and commodities futures. The stock market is also a medium for the redemption and issuance of financial instruments. Wall Street is another name for the stock market in the United States. In other markets around the world, they are known by the most prominent street of the financial district. At the stock market, institutional traders and stock brokers are responsible for buying and selling stocks for investors. Most of the buying and selling of stock happens electronically now, with many investors and traders doing it online.