GLOSSARY

EQUITY

10 May 2016 By PDSNET

That portion of share capital which carries risk, and shares in profits through the dividends which are dependent on profitability. Ordinary shares are often called equity shares. Other types of shares which carry less risk, such as convertible or participating preference shares are known as "near-equities". The equity of a company is the share capital plus the reserves of the company - which is the same as its net assets (net of liabilities). As a private investor you will generally be interested only in equity or ordinary shares because, even though they are riskier, they have the potential to give you a good capital gain and a rising dividend as the company’s profit increase

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