You're not buying the stock from that company.

When they assign a 120,000 market cap there...

And then what's left over, which is essentially so this is 2 million of equity, and then you'd have 2 million of equity here this 2 million of new equity, right?

Right?

So, remember, assets are equal to liabilites plus shareholder's equity, so if all of a sudden the market value of the equity, the market capitalization, for Ben's shoe company is 215,000... (That is the equity part right over here)

It can now support 2 million.

And as long as a company doesn't go bankrupt, they'll pay me some interest and pay me my money back.

So 26 minus 23 is equal to 3.

Our liabilities are still 3 billion.

Because the balance sheet is often called the company's books.

And you're probably asking, what do you get paid back for not liquidating it?

liabilities plus equity.

We're now moving into East Africa.

let's say this is a publicly traded company.

And the way you get that is, they're saying 3 a share and there are half a billion shares.

In a world without leverage so if I didn't have all this

The book value is 6.00, but the market saying no, no, no, we are willing to pay 12.00 per share for one of those shares.

So if theshareholders are wiling to pay 21.50 share for Ben's stock, and there are 10,000 shares in Ben's company

If I buy a share of IBM a lot of people say, oh, I saved I saved my money,

I use 100 gold pieces.

He lost a lot of money in the stock investment.

If you believe that this company's assets really are worth 30 million, what should you pay for it?

So this is my liabilities.

What happens in a closed end fund is that all of the investors are essentially

because they're both on the right hand side.

So the shareholders' equity, or you could almost say the book value of the equity of the company, is 5 million. 5 million equity.

I think I originally set in the original video that we have 500 million shares.

When I own a stock in the company, I own a share of the equity, as opposed to a share of the debt, which is the case with the bond.

I put it in, I don't know, maybe I'm a good investor.

So 5 million of liabilities.

This is the building.

Corporate loans tend to be for simplicity purposes, interest only loans.

And they say, you know what?

Let's think a little bit about leverage.

goodness.

You have 3 billion of assets, 4 billion of liabilities, this is actually minus 1 billion of equity.

I can't afford 40 for one book!

And then the equity is, essentially we would look at this formula.

And I'm going to earn, or I'm going to grow just because

Other current assets.

But it's really a measure of the same thing.

And when the government of Singapore, or any investor, wants to buy new shares, they use the market value, what that stock is trading at, as a good reference point for what you might have to pay for those shares.

He's a stockbroker.

little premium over it.

So essentially, instead of Countrywide being responsible for my loan, my payments now go to these investors.