Equity is the total amount of money that a shareholder is entitled to receive if all of a company’s assets are liquidated after clearing all debts. When a company requires funds for its businesses and meets its working capital requirements, it can use both debt and equity instruments. It dispenses its shares or stocks through Initial Public Offerings (IPOs) or offers loan instruments with fixed interest rates, called debentures. When you invest in a company’s equities, you become its partial owner. Once a listed company provides its stocks to investors, they can be traded – purchased and sold – in stock exchanges, like the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

Investing in equity shares is well-favoured as they provide high returns. However, despite their potential high returns, they also have certain risk factors associated. Thus, it is essential to measure their risks before investing in equity stock.