In the context of financial assets, an equity is a share in the ownership of a publicly quoted company. For most companies there are two types of equity: ordinary shares, which have voting rights, and preference shares, which do not. Owners of preference shares rank ahead of ordinary shareholders in a liquidation. Equities are also referred to as "stocks" or "shares".

There are a number of advantages to owning shares in a business in this way. The stock exchange will have rules on how listed companies prepare and publish their accounts, how they disseminate 'price-sensitive' information, on the numbers of shares that are available to the public, and other such issues. Although itself a private business, any recognised exchange will be an essential part of business regulation in the country in which it operates.

Why do share prices go up and down?

Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested