Equity is the term used to describe the common or preferred stock that belongs to a company; this is also called an ownership interest. It can also mean the net worth of a company, also called the shareholder's equity. This can be calculated by subtracting all liabilities from the company's total assets.

The term equity also describes the value of securities held in an account. It represents the complete asset, as a liquidated asset at the current market value, when used in the context of futures trading.

The most commonly known use of the word is related to mortgages. In this context, the term represents the property value minus the remaining loan payments due on the mortgage. For example, if a home is worth $250,000, and the balance remaining on the principal mortgage is $200,000, the equity would be $50,000.

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