Equity refers to the ownership value in an asset or a company, representing the shareholders' stake. It is commonly associated with stocks, where investors buy shares to gain a portion of the company's profits and assets. Equity can also refer to the difference between the value of an asset and the amount owed on it, such as in real estate. In the context of corporate finance, equity financing involves raising capital through the sale of shares. This method allows companies to fund growth without incurring debt, but it also dilutes ownership among existing shareholders. Understanding equity is crucial for investors and business owners alike.