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Equity Security definition

There are several types of equity securities, but common stock is by far the most prevalent and well known. It offers ownership in a company.
  1. Define - Define equity securities.
  2. Context - Use equity security in a sentence.
  3. Quiz - Test your knowledge.
by Paul Alan Davis, CFA, July 16, 2016
Updated: December 31, 2018
Equity securities normally come with higher risk than debt securities. See what else they come with.

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Equity Security


An Equity Security is an investment in the equity or ownership side of a business. It is typically a variable investment, meaning an investor may face a loss of principal. In the event of bankruptcy, Equity Securities are given lower priority than Debt Securities.

The investor in an Equity Security is normally interested more in the growth of capital than in a stream of income, like dividends.

Equity Security prices are sensitive to the business cycle and the forward-looking prospects of the firm.

Synonym: stock, equities

In a Sentence

Doc:  Think of an equity security  like the ownership of a home.
Lia:  So brokerage firms offering margin are like mortgage lenders?


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Click box for answer.

Long investors in an equity security can lose more than 100% on their investment. | True or False?

False, unless they invested with margin.

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