What are equities in a business context?

Equities, in a business context, refer specifically to stocks that represent ownership shares in corporations. When an individual or investor purchases equity in a company, they are acquiring a stake in that company, which often comes with voting rights and the potential to earn dividends.

This ownership reflects a claim on a portion of the company's assets and earnings, making it a fundamental component of corporate finance. Equities can appreciate in value, allowing investors to benefit from capital gains as the company grows and becomes more profitable. This distinguishes equities from other financial instruments like government bonds, cash assets, or loans, which serve different functions in business finance and investment. Understanding equities is crucial for grasping the dynamics of corporate ownership and investment strategies.