34 votes

What is this type of equity called where I get a share of the profits for the duration of my employment?

There is no equity. You don't get dividends. You can't sell it at all. Not on the stock market. Not to other investors. Not back to the company. This is an example of profit sharing. You are getting ...
mhoran_psprep's user avatar
21 votes

I can't understand what equity is

Consider something tangible: a car. You buy it for $20,000 and borrow $10,000 of that. At some point in the future, the car is worth $15,000 and you still owe $9,000. Your equity is the difference - $...
Kate Gregory's user avatar
  • 13.2k
16 votes

I can't understand what equity is

Equity is the amount of value that's yours. If you get $50000 by borrowing $50000 from the bank, you didn't really get $50000. You have $50000 cash, but it's not really yours. If you earned $50000, ...
user253751's user avatar
  • 2,839
11 votes

Are there any amortized home mortgage loans where the monthly payments are distributed equally between interest and principal?

Such a product does not exist. And it would be pretty unlikely that you'd be able to get such a thing past a regulator and ensure that you as a lender actually make money. Let's work through the ...
Justin Cave's user avatar
  • 27.3k
10 votes

I can't understand what equity is

Kate explains the first question well, but I think there's something to add for the second: People buy stocks not just for the current equity value (assets - liabilities), but for a share of future ...
D Stanley's user avatar
  • 135k
6 votes

How is fundamental analysis done on index funds?

Most of what is called fundamental analysis is simply irrelevant for index funds. Statistics are available for how well a fund tracks its selected index, and rating agencies express opinions (which ...
keshlam's user avatar
  • 46.5k
5 votes

Why aren’t amortized loans outlawed and replaced with a more equitable model to the borrower?

If you restrict how much profit the bank can make from lending, you'll get less lending. And that will prevent a lot of people from getting loans at all. If we're talking about a $500k loan, that's ...
Justin Cave's user avatar
  • 27.3k
4 votes

What is this type of equity called where I get a share of the profits for the duration of my employment?

It can be just performance-based bonus, or profit sharing. If the performance is based on actual shares (without issuing them), you may want to look into Phantom Stock.
Anon's user avatar
  • 41
3 votes
Accepted

Explaining equity being analogous to a call option and bonds being equivalent to a short put

Let A = assets (enterprise value) and D = debt. If A > D, then the firm is solvent: Bonds have the full value D, and equity has the value A - D. If A < D, then the firm is bankrupt: Bondholders ...
nanoman's user avatar
  • 29.7k
3 votes

Why aren’t amortized loans outlawed and replaced with a more equitable model to the borrower?

Amortizing loans match how banks receive money and how they pay it out. When you have a savings account with the bank, it earns a certain interest rate monthly, say 0.5% monthly for a 6% annual rate. ...
D Stanley's user avatar
  • 135k
2 votes

Why aren’t amortized loans outlawed and replaced with a more equitable model to the borrower?

I think you have amortising and compounding confused. Amortisation means that the total amount still owing falls with each payment - you could have an amortising loan with 0% interest. Taking your ...
MD-Tech's user avatar
  • 8,955
2 votes

How do I know if selling equity is better or not in this problem?

Your equity is currently earning 12.5% per year (750k/6M = 0.125) so it is earning more than your debt would cost. I assume that this property is not earning anything since it's "for personal use&...
D Stanley's user avatar
  • 135k
2 votes

Equity cannot be redeemed at the option of the holder

It's a bit complex, but remember that there can be different forms of equity, namely common and preferred. Common equity generally takes the form of exchange-listed common stock, but preferred equity ...
user68318's user avatar
  • 364
1 vote

I can't understand what equity is

Accounting Assets are what you have. The tangible and intangible things that you control that are worth money. Liabilities are what you owe. The debts that you are obliged to repay to other people at ...
Dale M's user avatar
  • 3,200
1 vote

I can't understand what equity is

But what is equity? For example, if we consider stocks. The company emits stocks at some price (let's say 100$ per share). The company gets cash (which is an asset), but what do these stocks balance ...
JimmyJames's user avatar
  • 3,850
1 vote

How does an equity partnership relate to company's valuation?

The first thing to do is either. Contact HR or a senior partner you trust to discuss the numerous valid explanations for the inconsistency. Then ask your CPA or lawyer to go through the agreement if ...
Dgitalzen's user avatar
1 vote
Accepted

References/terms to search for regarding financial instrument universe selection

It's a very open ended question, but you could try to answer this from a risk perspective. For example: You believe that Us companies will do well in the next 5 years, so you want risk exposure to ...
ThatDataGuy's user avatar

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