DEFINITION of 'Cash Equity'
1. In real estate, the amount of money an owner has invested in the property. If someone bought a house, the down payment would be their cash equity.
2. Another word for common stock. The cash equity market is the same thing as the stock market. It's where companies raise cash by selling shares of ownership and where investors buy and sell those shares of ownership.
INVESTOPEDIA EXPLAINS 'Cash Equity'
1. By contrast, market equity represents a property's value to its owner based on an increase in demand. If someone bought a $100,000 house with 20% down and the house was now worth $130,000, that owner would have $20,000 in cash equity in the property and $30,000 in market equity. The owner's cash equity position is stable and increases each month as a portion of his monthly mortgage payment goes towards paying down the principal borrowed. Market equity can change at any time as real estate market and broader economic conditions fluctuate.
2. The first cash equity markets in the United States were the Philadelphia Stock Exchange and the New York Stock Exchange. Investors can buy and sell cash equities through an account with a brokerage firm.
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