Hold "Ctrl" (this will give you a perfect circle), click the "Ellipse Tool" and drag the circle out with the mouse. You can resize it with the "Object Size" boxes at the top left of the screen.
Type your text and size it. With the text still selected, select "Text" from the top menu and select "Fit Text to Path". Move your cursor to the edge of the circle. If you move the cursor around the circle you will be given options for where to place the text.
You can slide the text around the circle, move it further in or further out. When you're happy with the position, click the left mouse button to place the text.
You'll find that the circle and text are now treated as one object so select "Arrange" and "Break Text Apart" and then delete the circle.
Now select your text. To colour your text - left click on a colour in the colour palette to control the "Fill" colour of the text and right click on a colour to control the "Outline" colour of the text.
To remove a fill or outline colour (make it transparent) right or left click the small box with the X through it in the bottom left of the screen.