Equity (finance) explained to kids

Equity is the value of ownership in a company. It can be in the form of shares, which represent a portion of the company, or in the form of assets, which are the company's physical property. The value of equity is determined by the market, which is the price that investors are willing to pay for the shares. The market value of equity can be different from the book value, which is the value of the assets on the balance sheet. The equity market is where shares of ownership in companies are bought and sold. Equity markets can be either public, which are regulated by governments, or private, which are not. Public equity markets are where most people buy and sell shares. The two largest public equity markets in the world are the New York Stock Exchange (NYSE) and the Nasdaq. Private equity markets are for institutional investors, such as banks, insurance companies, and pension funds. These investors buy and sell shares in companies that are not listed on public exchanges. Equity markets are important because they provide a way for companies to raise money to grow and expand their businesses. Equity markets also provide a way for investors to make money by buying shares of companies that increase in value.