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Meaning / Definition of

Kuwait Investment Authority

Categories: Finance,

The Kuwait Investment Authority (KIA) is a government-owned corporation responsible for managing the sovereign wealth fund of Kuwait. The KIA was initially created in 1953 to create a fund for future use and lessen the country's dependence on its oil reserves. The source of the money for the sovereign wealth fund is derived primarily from the excess proceeds from Kuwait's oil reserves.

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Definition / Meaning of

Dilution

Categories: Fundamental Analysis, Legal, ,

Dilution occurs when a company issues additional shares of stock, and as a result the earnings per share and the book value per share decline. This happens because earnings per share and book value per share are calculated by dividing the total earnings or book value by the number of existing shares. The larger the number of shares, the lower the value of each share. Lower earnings per share may trigger a selloff in the stock, lowering its price. That's one reason a company may choose to issue bonds rather than new stock to raise additional capital.Similarly, if companies merge or one buys another, earnings may be diluted if they don't increase proportionately with the combined number of shares in the newly created company.Dilution can also occur if warrants and stock options on a stock are exercised, and if convertible bonds and preferred stock the company issued are converted to common stock. Companies must report the worst-case potential for such dilution, or loss of value, to their shareholders as diluted earnings per share.

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