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?
Shares are traded at places called exchanges. At these exchanges, traders buy and sell shares of companies. Generally, the price of a share is determined by supply and demand. For example, if there are more people wanting to buy a stock than to sell it, the price will be driven up because those shares are rarer and people will pay a higher price for them. On the other hand, if there are a lot of shares for sale and no one is interested in buying them, the price will quickly fall.
Because of this, the market can appear to fluctuate widely. Even if there is nothing wrong with a company, a large shareholder who is trying to sell millions of shares at a time can drive the price of the stock down, simply because there are not enough people interested in buying the stock he/she is trying to sell.
However, in general, if a company has good long-term growth prospects, a strong balance sheet and good management, demand for its shares is expected to be high, which drives the share price up.
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