How did 'equity' semantically broaden to mean 'common shares'?

scherz0

New Member

[Gratuitous 1Mb jpeg removed]

I ask about its meaning merely for stocks here (not Equity = Assets — Liabilities). See Personal Finance For Canadians For Dummies (2018), p 217.

Equity — not to be confused with equity in real estate — is another word for stocks.
What semantic notions underlie definitions 1 and 2 above with the Latinate meanings below?

early 14c., "quality of being equal or fair, impartiality in dealing with others," from Old French equite (13c.),
from Latin aequitatem (nominative aequitas) "equality, uniformity, conformity, symmetry; fairness, equal rights; kindness, moderation,"
from aequus "even, just, equal" (see equal (adj.)).
As the name of a system of law, 1590s, from Roman naturalis aequitas, the general principles of justice which corrected or supplemented the legal codes.
 
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Michael Zwingli

Active Member

It is not necessary to investigate the Latin lemma to understand this.

Shares of a company which "do not pay interest at a fixed rate" are called "equities" because they pay out in an 'equitable' manner, which is to say: in a manner corresponding to the market valuation of the company. In this, the dividends paid out exist in a state of equity in relation to the company's valuation, rather than paying dividends in an inherently inequitable manner (with respect to the company's valuation, as would fixed-rate interests. This particular use of the term is analogous to so-called "shareholders' equity", which represents the amount of money that would be returned to a publicly traded company’s shareholders if all of the assets were liquidated and all of the company's debt was paid off pursuant to a liquidation. In both uses, the term "equity" implies that the holder's share of interest in the company is tied to the company's market valuation.
 
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cinefactus

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Why do you keep asking these questions?

Why are you asking them by posting jpegs? If you have a question, type it in. Any threads with gratuitous images will be deleted.
 

scherz0

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Why do you keep asking these questions?

Why are you asking them by posting jpegs? If you have a question, type it in. Any threads with gratuitous images will be deleted.
I'm interested in the semantic relationships between finance terms and their Latin etymons.

I found some of these questions on other websites. Faster to screenshot them, than re-type everything.
 

cinefactus

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You are expecting us to spend our time answering—in that case I think it is not unreasonable for you to spend some time asking. Besides, the images take up storage space that we have to pay for.
 

Michael Zwingli

Active Member

I'm interested in the semantic relationships between finance terms and their Latin etymons.
Just curious...why? It seems that if you were in banking or finance, that you would have realized the answer had nothing directly to do with Latin aequitās. So, if you're not a finance professional, then why bother about these things? As I say, I'm just curious...

Also, since this site is a wonderful resource for knuckleheads like me who have an interest in Latin, it will be very much appreciated for you to avoid the image files in general by typing your questions the old fashioned way. Thanks.
 
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