Equity is nothing but your ownership in an asset. Debt, on the other hand, doesn’t give you ownership but allows you to claim your money back with interest after a specific period of time. Bonds are the most commonly used debt instruments in the markets.
Consider a situation where you want to buy a Netflix subscription for INR800. Since, you didn’t have sufficient money – you are 11 for christ’s sake – you borrowed the sum from your mother and told her that you’d return the same in a month’s time with an additional cookie for her faith in you. This agreement/ bond that you signed with your mom is the debt you owe with cookie being the interest.
However, you also wish to share the subscription with 3 other friends of yours. In this case each of them pays INR200 and now own 25% shares of the subscription. This 25% is your and their equity.
Stock classifications aren’t always that simple, but we would keep more on stocks for Stocks 102 and 103.