What exactly are debt,equity ,shares & are they related,if yes,then how?

2 Answer(s)


Debt is nothing but loans that a company borrows from banks etc.

Equity is the ownership in the company by the promoters.

Shares are a financial instrument using which equity is owned by an investor.

They are related in the sense that if a company wants to raise new money, they have 2 options - Equity or Debt. So both these are instruments using which new cash can be raised by the company


So for example if you start your own company, and you need 10 lakhs of cash. If you borrow that money from a bank it is called debt.
If you invest the money from your own savings then you own equity in the company,

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