Cash Equity

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.

BREAKING DOWN '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.

RELATED TERMS
  1. Equity Market

    The market in which shares are issued and traded, either through ...
  2. Equity

    Equity is the value of an asset less the value of all liabilities ...
  3. Debt/Equity Ratio

    Debt/Equity Ratio is debt ratio used to measure a company's financial ...
  4. Equity Fund

    A mutual fund that invests principally in stocks. It can be actively ...
  5. Shareholders' Equity

    A firm's total assets minus its total liabilities. Equivalently, ...
  6. Balloon Payment

    An oversized payment due at the end of a mortgage, commercial ...
Related Articles
  1. Investing Basics

    The Changing Role Of Equity Research

    Research creates a division of labor that makes the market more efficient. Learn how its role has changed.
  2. Mutual Funds & ETFs

    Create Your Own U.S. Equity Portfolio

    Find out how to structure your portfolio so you can maximize returns.
  3. Professionals

    The Workings Of Equity Portfolio Management

    Achieve analytical efficiency by applying your evaluation to a key set of stocks.
  4. Fundamental Analysis

    The Equity-Risk Premium: More Risk For Higher Returns

    Learn how the expected extra return on stocks is measured and why academic studies usually estimate a low premium.
  5. Options & Futures

    Home-Equity Loans: What You Need To Know

    We shed light on why consumers decide to use this form of debt and whether it is a good alternative.
  6. Options & Futures

    Home-Equity Loans: The Costs

    Learn the factors to consider when comparing the different programs offered by various lenders.
  7. Bonds & Fixed Income

    Equity Premiums: Looking Back And Looking Ahead

    If stocks become less profitable in the future, you may have to change your investment strategy.
  8. Credit & Loans

    What is an Alt-A Mortgage?

    Called "liar loans" for their low documentation requirements, Alt-A mortgages were hot until the subprime crisis. Now Wall Street wants to bring them back.
  9. Credit & Loans

    New Rules May Make It Easier to Get a Mortgage

    Fannie Mae and Freddie Mac have come to terms with lenders on how to solve mortgage disputes. This could be good news for people with lower credit ratings.
  10. Retirement

    Best Mortgage Companies Friendly to Retirees

    If you’re no longer in the workforce and need a loan to buy a home, which companies are the most welcoming? Plus, good news about qualifying for a loan.
RELATED FAQS
  1. What is after-hours trading? Am I able to trade at this time?

    After-hours trading (AHT) refers to the buying and selling of securities on major exchanges outside of specified regular ... Read Full Answer >>
  2. Do FHA loans require escrow accounts?

    Federal Housing Administration (FHA) loans require escrow accounts for property taxes, homeowners insurance and mortgage ... Read Full Answer >>
  3. Do FHA loans have prepayment penalties?

    Unlike subprime mortgages issued by some conventional commercial lenders, Federal Housing Administration (FHA) loans do not ... Read Full Answer >>
  4. Can FHA loans be refinanced?

    Federal Housing Administration (FHA) loans can be refinanced in several ways. According to the U.S. Department of Housing ... Read Full Answer >>
  5. Can FHA loans be used for investment property?

    Federal Housing Administration (FHA) loans were created to promote homeownership. These loans have lower down payment requirements ... Read Full Answer >>
  6. Do FHA loans have private mortgage insurance (PMI)?

    he When you make a down payment from 3 to 20% of the value of your home and take out a Federal Housing Administration (FHA) ... Read Full Answer >>
Hot Definitions
  1. Harry Potter Stock Index

    A collection of stocks from companies related to the "Harry Potter" series franchise. Created by StockPickr, this index seeks ...
  2. Liquidation Margin

    Liquidation margin refers to the value of all of the equity positions in a margin account. If an investor or trader holds ...
  3. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  4. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  5. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
Trading Center