What does equity in financial terms refer to?

Equity in financial terms primarily refers to the value of ownership in an asset after all liabilities related to that asset are subtracted. While "fairness and impartiality" captures a broader philosophical or ethical aspect of equity, in financial contexts it is more specifically related to ownership rights.

In the context of investments, equity represents the ownership stake shareholders have in a company, expressed as the difference between total assets and total liabilities. This means that equity can refer to ownership in various forms, including stocks in a company or shares in real estate.

While maximizing profits is an objective for many businesses, it does not directly define equity. Similarly, an investment in the stock market can encompass equity holdings, but is not synonymous with the term itself. Ownership of real estate is a specific type of equity but does not encompass the entire financial concept. Thus, the most appropriate interpretation of equity in this context is its foundational definition relating to ownership and value in assets.