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What is private equity and how does it differ from public equity?

Curious about private equity

What is private equity and how does it differ from public equity?

Private equity is a type of investment where capital is invested in private companies that are not publicly traded on stock exchanges. Private equity firms pool money from investors and use it to invest in private companies, with the aim of generating a return on investment when the company is eventually sold or taken public.

Public equity, on the other hand, refers to investments made in publicly traded companies that are listed on stock exchanges. Investors can buy and sell shares of these companies on the open market, and the value of their investments is determined by the market price of the shares.

The main difference between private equity and public equity is the level of liquidity and transparency. Private equity investments are typically illiquid, meaning they cannot be easily bought or sold, and there is less transparency in terms of the company's financial performance and operations. Public equity investments, on the other hand, offer more liquidity and transparency, but may also be subject to more market volatility.

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