Educational articles

What is OPEC and its Impact on the Economy

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What is OPEC? OPEC stands for Organization of Petroleum Exporting Countries. It is a cartel which consist of 12 oil-producing countries. They include Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, Qatar, Indonesia, Libya, The United Arab Emirates, Algeria, Nigeria, Ecuador, Gabon, Angola and Equatorial Guinea. OPEC is a permanent intergovernmental organisation which is headquartered in Vienna Austria. The organisation controls 78 percent of the world’s oil exports. As these OPEC nations produce such a significant portion of the world’s oil supply, …

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The Basics of an Initial Public Offer (IPO)

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IPO Definition An initial public offering (IPO) is when a private company first offers stock to the public as it becomes a publicly traded company. These companies undergo IPOs to grow their business, and they need to raise capital to do so. IPOs are also a cost-efficient way to finance growth objectives. When companies sell shares to the public, they increase their equity. This improves the company’s debt to equity ratio, which will improve their ability to borrow funds if …

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7 Factors the RBA Uses to Evaluate Interest Rates

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The current cash rate of 1.5 per cent is the lowest we have had in Australia. The Reserve Bank of Australia (RBA) has had rates on hold at 1.5 per cent since 3 August 2016. There is always a debate in the market about whether the next move in interest rates sees the rate head higher or lower, and in what time frame. So what are the factors that the RBA evaluates when determining interest rate rises or cuts? RBA …

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What you need to know about share buy backs

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The definition of a share buy back is when the company repurchases their own shares in the open market. Once shares are sold back to the company, the total number of shares the company has on issue is reduced. This means that a larger portion of shares is held by the company compared to before the buy back. Companies do this as a way to return wealth to the shareholders. Reasons for companies participating in share buy backs Management might …

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What you need to know about takeover bids on the Australian share market

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A takeover bid is an offer by an acquiring company or third party to purchase a sizeable portion of equity of another company. The price offered is usually at a premium to the market price to entice investors to participate. The takeover bid will only proceed if the acquiring firm receives a certain number of shareholders who want to participate in the bid. If the takeover bid is successful, the investor tenders their shares. This means that they sell their …

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