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Hi All,
Need 20 hearts for message.
Thanks in advance
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Equity is a percentage of the companies value. The company giving you stock is a form of equity, but it could also be a set percentage (but probably not).
Stock options are the option to buy company stock at some point in the future at a set price. So the company could give you the option to buy 1,000 shares in two years at $10 a share. If the current share price is $20, and the value increases to $25 than you've effectively been given $15,000. It's a way of compensating employees based on how well the company does.
This is a great descripton. Thank you!
I'll be honest...I have always wondered as well but was too scared to ask. I'm so glad someone asked.
Looool, no worries haha
Kind of clueless with this stuff but I feel like some companies use them interchangeably even though they mean different things which makes me even more confused?
You can own shares of stock in a company through stock options. Having equity in a company means some amount of ownership I'm pretty sure.
So they are different then?
Following.
Chief
Equity = Stock or part ownership of the company. Some equity requires you be an employee at the time of any payout (e.g. if the company is acquired).
Option = An option to buy a certain amount of stock at a set price, typically below market value or before the company goes public. If the stock rises in value this can very lucrative.
Employee Stock Purchase Programs = A benefit that allows employees to buy company stock using pre-tax money, sometimes at a discount.
I've always thought of it as stocks = public ownership and I'm part of the public equity = private company ownership and I have a slice of the pie. Too simplistic maybe?