equity

A company's assets, less its liabilities, which are the property of the owner or shareholders. Popularly, equities are stocks and shares which do not pay interest at fixed rates but pay dividends based on the company's performance. The value of equities tends to rise over the long term, but in the short term they are a risk investment because prices can fall as well as rise. Equity is also used to refer to the paid value of mortgaged real property, most commonly a house.

With changes in US tax regulations, from the late 1980s, home-equity loans (second mortgages) have become a very popular financial tool, since the interest is, like mortgage interest, tax deductible.