Equity is the value assigned to owners of a business. A business can sell its equity for acquiring cash which can be used either to start up new or expand the existing operations.
The two types of equity shares sold by the companies are Common Equity and Preferred Equity.
Common Equity: Common stockholders are usually assigned voting rights and holders are entitled to profits through dividends through they rank last for distribution by the company.
Preferred Equity: Less volatile and having lesser potential for profit than common stock, preferred stock usually receives pre-defined dividend.