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An equity investment generally refers to the buying and holding of shares of stock
on a stock market by individuals and firms in anticipation of income from
dividends and capital gains, as the value of the stock rises. Typically equity holders
receive voting rights, meaning that they can vote on candidates for the board of
directors (shown on a diversification of the fund(s) and to obtain the skill of the
professional fund managers in charge of the fund(s). An alternative, which is
usually employed by large private investors and pension funds, is to hold shares
directly; in the institutional environment many clients who own portfolios have
what are called segregated funds, as opposed to or in addition to the pooled mutual
fund alternatives.
Accounting
In financial accounting, owner's equity consists of the net assets of an entity. Net
assets is the difference between the total assets of the entity and all its liabilities.[2]
Equity appear on the balance sheet / statement of financial position, one of the four
primary financial statements.
The assets of an entity includes both tangible and intangible items, such as brand
names and reputation or goodwill. The types of accounts and their description that
comprise the owner's equity depend on the nature of the entity and may include the
following:
Share capital
Preferred stock
Capital surplus
Retained earnings
Treasury stock
Stock options
Reserve
Book value
The book value of equity will change in the case of the following events: