In finance, a portfolio is a collection of investments held by an investment company, hedge fund, financial institution or individual. The term “portfolio” refers to any combination of financial assets such as stocks and cash. Portfolios may be held by individual investors and/or managed by financial professionals, hedge funds and other financial institutions, it is a accepted principle that a portfolio is designed according to the investor's risk tolerance, time frame and investment objectives. The monetary value of each asset may influence the risk/reward ratio of the portfolio; the portfolio is divided into two types they are non discretionary portfolios. When determining a proper asset allocation one aims at maximizing the expected return and minimizing the risk; this is an example of a multi-objective optimization problem: many efficient solutions are available and the preferred solution must be selected by considering a tradeoff between risk and return. In particular, a portfolio A is dominated by another portfolio A' if A' has a greater expected gain and a lesser risk than A.
If no portfolio dominates A, A is a Pareto-optimal portfolio. The set of Pareto-optimal returns and risks is called the Pareto efficient frontier for the Markowitz portfolio selection problem. Newly, an alternative approach to portfolio diversification has been suggested in the literatures that combines risk and return in the optimization problem. There are many types of portfolios including the zero-investment portfolio. A portfolio's asset allocation may be managed utilizing any of the following investment approaches and principles: equal weighting, capitalization-weighting, price-weighting, risk parity, the capital asset pricing model, arbitrage pricing theory, the Jensen Index, the Treynor ratio, the Sharpe diagonal model, the value at risk model, modern portfolio theory and others. There are several methods for calculating performance. One traditional method is using monthly money-weighted returns. There are several models for measuring the performance attribution of a portfolio's returns when compared to an index or benchmark viewed as investment strategy.
Outline of finance § Portfolio theory Capital asset pricing model Infection ratio Investment management
The euro is the official currency of 19 of the 28 member states of the European Union. This group of states is known as the eurozone or euro area, counts about 343 million citizens as of 2019; the euro is the second largest and second most traded currency in the foreign exchange market after the United States dollar. The euro is subdivided into 100 cents; the currency is used by the institutions of the European Union, by four European microstates that are not EU members, as well as unilaterally by Montenegro and Kosovo. Outside Europe, a number of special territories of EU members use the euro as their currency. Additionally, 240 million people worldwide as of 2018 use currencies pegged to the euro; the euro is the second largest reserve currency as well as the second most traded currency in the world after the United States dollar. As of August 2018, with more than €1.2 trillion in circulation, the euro has one of the highest combined values of banknotes and coins in circulation in the world, having surpassed the U.
S. dollar. The name euro was adopted on 16 December 1995 in Madrid; the euro was introduced to world financial markets as an accounting currency on 1 January 1999, replacing the former European Currency Unit at a ratio of 1:1. Physical euro coins and banknotes entered into circulation on 1 January 2002, making it the day-to-day operating currency of its original members, by March 2002 it had replaced the former currencies. While the euro dropped subsequently to US$0.83 within two years, it has traded above the U. S. dollar since the end of 2002, peaking at US$1.60 on 18 July 2008. In late 2009, the euro became immersed in the European sovereign-debt crisis, which led to the creation of the European Financial Stability Facility as well as other reforms aimed at stabilising and strengthening the currency; the euro is managed and administered by the Frankfurt-based European Central Bank and the Eurosystem. As an independent central bank, the ECB has sole authority to set monetary policy; the Eurosystem participates in the printing and distribution of notes and coins in all member states, the operation of the eurozone payment systems.
The 1992 Maastricht Treaty obliges most EU member states to adopt the euro upon meeting certain monetary and budgetary convergence criteria, although not all states have done so. The United Kingdom and Denmark negotiated exemptions, while Sweden turned down the euro in a 2003 referendum, has circumvented the obligation to adopt the euro by not meeting the monetary and budgetary requirements. All nations that have joined the EU since 1993 have pledged to adopt the euro in due course. Since 1 January 2002, the national central banks and the ECB have issued euro banknotes on a joint basis. Euro banknotes do not show. Eurosystem NCBs are required to accept euro banknotes put into circulation by other Eurosystem members and these banknotes are not repatriated; the ECB issues 8% of the total value of banknotes issued by the Eurosystem. In practice, the ECB's banknotes are put into circulation by the NCBs, thereby incurring matching liabilities vis-à-vis the ECB; these liabilities carry interest at the main refinancing rate of the ECB.
The other 92% of euro banknotes are issued by the NCBs in proportion to their respective shares of the ECB capital key, calculated using national share of European Union population and national share of EU GDP weighted. The euro is divided into 100 cents. In Community legislative acts the plural forms of euro and cent are spelled without the s, notwithstanding normal English usage. Otherwise, normal English plurals are sometimes used, with many local variations such as centime in France. All circulating coins have a common side showing the denomination or value, a map in the background. Due to the linguistic plurality in the European Union, the Latin alphabet version of euro is used and Arabic numerals. For the denominations except the 1-, 2- and 5-cent coins, the map only showed the 15 member states which were members when the euro was introduced. Beginning in 2007 or 2008 the old map is being replaced by a map of Europe showing countries outside the Union like Norway, Belarus, Russia or Turkey.
The 1-, 2- and 5-cent coins, keep their old design, showing a geographical map of Europe with the 15 member states of 2002 raised somewhat above the rest of the map. All common sides were designed by Luc Luycx; the coins have a national side showing an image chosen by the country that issued the coin. Euro coins from any member state may be used in any nation that has adopted the euro; the coins are issued in denominations of €2, €1, 50c, 20c, 10c, 5c, 2c, 1c. To avoid the use of the two smallest coins, some cash transactions are rounded to the nearest five cents in the Netherlands and Ireland and in Finland; this practice is discouraged by the Commission, as is the practice of certain shops of refusing to accept high-value euro notes. Commemorative coins with €2 face value have been issued with changes to the design of the national side of the coin; these include both issued coins, such as the €2 commemorative coin for the fiftieth anniversary of the signing of the Treaty of Rome, nationally i
International Monetary Fund
The International Monetary Fund is an international organization headquartered in Washington, D. C. consisting of "189 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, reduce poverty around the world." Formed in 1944 at the Bretton Woods Conference by the ideas of Harry Dexter White and John Maynard Keynes, it came into formal existence in 1945 with 29 member countries and the goal of reconstructing the international payment system. It now plays a central role in the management of balance of payments difficulties and international financial crises. Countries contribute funds to a pool through a quota system from which countries experiencing balance of payments problems can borrow money; as of 2016, the fund had SDR477 billion. Through the fund, other activities such as the gathering of statistics and analysis, surveillance of its members' economies and the demand for particular policies, the IMF works to improve the economies of its member countries.
The organisation's objectives stated in the Articles of Agreement are: to promote international monetary co-operation, international trade, high employment, exchange-rate stability, sustainable economic growth, making resources available to member countries in financial difficulty. IMF funds come from two major sources:quotas and loans. Quotas, which are pooled funds of member nations, generate most IMF funds; the size of a member's quota depends on its financial importance in the world. Nations with larger economic importance have larger quotas; the quotas are increased periodically as a means of boosting the IMF's resources. The current Managing Director and Chairwoman of the International Monetary Fund is French lawyer and former politician, Christine Lagarde, who has held the post since 5 July 2011. Gita Gopinath was appointed as Chief Economist of IMF from October 1, 2018, she received her Ph. D. in economics from Princeton University. According to the IMF itself, it works to foster global growth and economic stability by providing policy advice and financing the members by working with developing nations to help them achieve macroeconomic stability and reduce poverty.
The rationale for this is that private international capital markets function imperfectly and many countries have limited access to financial markets. Such market imperfections, together with balance-of-payments financing, provide the justification for official financing, without which many countries could only correct large external payment imbalances through measures with adverse economic consequences; the IMF provides alternate sources of financing. Upon the founding of the IMF, its three primary functions were: to oversee the fixed exchange rate arrangements between countries, thus helping national governments manage their exchange rates and allowing these governments to prioritize economic growth, to provide short-term capital to aid the balance of payments; this assistance was meant to prevent the spread of international economic crises. The IMF was intended to help mend the pieces of the international economy after the Great Depression and World War II; as well, to provide capital investments for economic growth and projects such as infrastructure.
The IMF's role was fundamentally altered by the floating exchange rates post-1971. It shifted to examining the economic policies of countries with IMF loan agreements to determine if a shortage of capital was due to economic fluctuations or economic policy; the IMF researched what types of government policy would ensure economic recovery. A particular concern of the IMF was to prevent financial crisis, such as those in Mexico 1982, Brazil in 1987, East Asia in 1997–98 and Russia in 1998, from spreading and threatening the entire global financial and currency system; the challenge was to promote and implement policy that reduced the frequency of crises among the emerging market countries the middle-income countries which are vulnerable to massive capital outflows. Rather than maintaining a position of oversight of only exchange rates, their function became one of surveillance of the overall macroeconomic performance of member countries, their role became a lot more active because the IMF now manages economic policy rather than just exchange rates.
In addition, the IMF negotiates conditions on lending and loans under their policy of conditionality, established in the 1950s. Low-income countries can borrow on concessional terms, which means there is a period of time with no interest rates, through the Extended Credit Facility, the Standby Credit Facility and the Rapid Credit Facility. Nonconcessional loans, which include interest rates, are provided through Stand-By Arrangements, the Flexible Credit Line, the Precautionary and Liquidity Line, the Extended Fund Facility; the IMF provides emergency assistance via the Rapid Financing Instrument to members facing urgent balance-of-payments needs. The IMF is mandated to oversee the international monetary and financial system and monitor the economic and financial policies of its member countries; this activity facilitates international co-operation. Since the demise of the Bretton Woods system of fixed exchange rates in the early 1970s, surveillance has evolved by way of changes in procedures rather than through the adoption of new obligations.
The responsibilities changed from those of guardian to those of overseer of members' policies. The Fund analyses the appropriateness of each member country's economic and financial policies for achieving orderly economic growth, assesses the consequences of these policies for other countries and for the global e
The World Currency Unit WOCU is an EU trademarked synthetic global currency quotation. It is derived from a weighted basket of currencies of fiat currency pairs covering the top 20 economies of the world; each country’s currency representation is weighted by its relative proportion of the top 20 economies as measured by GDP. The WOCU’s nearest comparator was the more narrowly constructed ECU, the European Currency Unit basket that preceded the successor Euro; the WOCU offers a transparent stable currency quotation as a hub currency reference for cross border trade to reduce volatility and risk. It reacts to the economic growth and decline of constituent country economies, adjusting the prominence of their respective currencies; the WOCU is outputted in up to real time, in sub second updates. Input FX data is sourced from global aggregated FX data providers. Countries within the Euro zone are treated as individual countries in the WOCU weighting calculation; this means that some countries within the Euro zone are included, such as Germany, whilst others are excluded, such as Ireland, purely on the basis of that country’s top 20 GDP qualification or disqualification.
The GDP values of each country issued by the International Monetary Fund in its World Economic Outlook forecast are reviewed as these figures become available and a biannual re-weighting of the benchmark basket performed. This means that the member countries included in the basket, therefore their currencies, may change up to twice a year either by the weighting for their currency being adjusted or by their fiat currency being promoted into or demoted out of the basket; this results in the basket consisting of 15 separate currencies, the Euro currency being common to 6 nation states included in the WOCU basket. Review and approval of weighting adjustments is subject to a confirmation process overseen by the WOCU Oversight Committee, a body consisting of a majority of independent persons qualified and authorised to approve or reject any change to the constitution of the WOCU. In the circumstance of a reweighting where a country changes its currency, the replacement country currency FX data will form the same proportion of the WOCU and the former currency will be dropped in the same proportion at the same time that the relevant country introduces its new currency, which shall be assessed and approved by the WOCU Oversight Committee.
The WOCU is used to price commodities such as bunker fuel and as a reference currency for global investors and companies seeking to mitigate bilateral exchange rate volatility. In early 2019 Unite Global AS, a Norway incorporated provider of a Correspondent banking hub platform for cross border banking payments and real-time settlement revealed it was in discussions for the issuance and distribution of WOCU currency. Special drawing rights Bancor European Currency Unit Ven World currency unit World currency Coats, Warren "In Search of a Monetary Anchor: A'New' Monetary Standard", IMF Working Paper No. 89/82. Staff of the International Monetary Fund "World Economic Outlook, October 2009: Sustaining the Recovery", October 15, 2009 Kang, Juanyi Xu "The Optimal Currency Basket with Input Currency and Output Currency", HKIMR Working Paper No. 17/2008 Ho, Lok Sang. "Towards a New International Monetary Order: The World Currency Unit and the Global Indexed Bond". The World Economy. 23: 939–950. Doi:10.1111/1467-9701.00310.
Archived from the original on September 17, 2006. Retrieved 2007-07-03. Official website
Economics is the social science that studies the production and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents. Microeconomics analyzes basic elements in the economy, including individual agents and markets, their interactions, the outcomes of interactions. Individual agents may include, for example, firms and sellers. Macroeconomics analyzes the entire economy and issues affecting it, including unemployment of resources, economic growth, the public policies that address these issues. See glossary of economics. Other broad distinctions within economics include those between positive economics, describing "what is", normative economics, advocating "what ought to be". Economic analysis can be applied throughout society, in business, health care, government. Economic analysis is sometimes applied to such diverse subjects as crime, the family, politics, social institutions, war and the environment; the discipline was renamed in the late 19th century due to Alfred Marshall, from "political economy" to "economics" as a shorter term for "economic science".
At that time, it became more open to rigorous thinking and made increased use of mathematics, which helped support efforts to have it accepted as a science and as a separate discipline outside of political science and other social sciences. There are a variety of modern definitions of economics. Scottish philosopher Adam Smith defined what was called political economy as "an inquiry into the nature and causes of the wealth of nations", in particular as: a branch of the science of a statesman or legislator a plentiful revenue or subsistence for the people... to supply the state or commonwealth with a revenue for the publick services. Jean-Baptiste Say, distinguishing the subject from its public-policy uses, defines it as the science of production and consumption of wealth. On the satirical side, Thomas Carlyle coined "the dismal science" as an epithet for classical economics, in this context linked to the pessimistic analysis of Malthus. John Stuart Mill defines the subject in a social context as: The science which traces the laws of such of the phenomena of society as arise from the combined operations of mankind for the production of wealth, in so far as those phenomena are not modified by the pursuit of any other object.
Alfred Marshall provides a still cited definition in his textbook Principles of Economics that extends analysis beyond wealth and from the societal to the microeconomic level: Economics is a study of man in the ordinary business of life. It enquires how he uses it. Thus, it is on the one side, the study of wealth and on the other and more important side, a part of the study of man. Lionel Robbins developed implications of what has been termed "erhaps the most accepted current definition of the subject": Economics is a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses. Robbins describes the definition as not classificatory in "pick out certain kinds of behaviour" but rather analytical in "focus attention on a particular aspect of behaviour, the form imposed by the influence of scarcity." He affirmed that previous economists have centred their studies on the analysis of wealth: how wealth is created and consumed. But he said that economics can be used to study other things, such as war, that are outside its usual focus.
This is because war has as the goal winning it, generates both cost and benefits. If the war is not winnable or if the expected costs outweigh the benefits, the deciding actors may never go to war but rather explore other alternatives. We cannot define economics as the science that studies wealth, crime and any other field economic analysis can be applied to; some subsequent comments criticized the definition as overly broad in failing to limit its subject matter to analysis of markets. From the 1960s, such comments abated as the economic theory of maximizing behaviour and rational-choice modelling expanded the domain of the subject to areas treated in other fields. There are other criticisms as well, such as in scarcity not accounting for the macroeconomics of high unemployment. Gary Becker, a contributor to the expansion of economics into new areas, describes the approach he favours as "combin assumptions of maximizing behaviour, stable preferences, market equilibrium, used relentlessly and unflinchingly."
One commentary characterizes the remark as making economics an approach rather than a subject matter but with great specificity as to the "choice process and the type of social interaction that analysis involves." The same source reviews a range of definitions included in principles of economics textbooks and concludes that the lack of agreement need not affect the subject-matter that the texts treat. A
European Economic Community
The European Economic Community was a regional organisation which aimed to bring about economic integration among its member states. It was created by the Treaty of Rome of 1957. Upon the formation of the European Union in 1993, the EEC was incorporated and renamed as the European Community. In 2009 the EC's institutions were absorbed into the EU's wider framework and the community ceased to exist; the Community's initial aim was to bring about economic integration, including a common market and customs union, among its six founding members: Belgium, Italy, the Netherlands and West Germany. It gained a common set of institutions along with the European Coal and Steel Community and the European Atomic Energy Community as one of the European Communities under the 1965 Merger Treaty. In 1993, a complete single market was achieved, known as the internal market, which allowed for the free movement of goods, capital and people within the EEC. In 1994, the internal market was formalised by the EEA agreement.
This agreement extended the internal market to include most of the member states of the European Free Trade Association, forming the European Economic Area covering 15 countries. Upon the entry into force of the Maastricht Treaty in 1993, the EEC was renamed the European Community to reflect that it covered a wider range than economic policy; this was when the three European Communities, including the EC, were collectively made to constitute the first of the three pillars of the European Union, which the treaty founded. The EC existed in this form until it was abolished by the 2009 Treaty of Lisbon, which incorporated the EC's institutions into the EU's wider framework and provided that the EU would "replace and succeed the European Community"; the EEC was known as the Common Market in the English-speaking countries and sometimes referred to as the European Community before it was renamed as such in 1993. In 1951, the Treaty of Paris was signed, creating Steel Community; this was an international community based on supranationalism and international law, designed to help the economy of Europe and prevent future war by integrating its members.
In the aim of creating a federal Europe two further communities were proposed: a European Defence Community and a European Political Community. While the treaty for the latter was being drawn up by the Common Assembly, the ECSC parliamentary chamber, the proposed defense community was rejected by the French Parliament. ECSC President Jean Monnet, a leading figure behind the communities, resigned from the High Authority in protest and began work on alternative communities, based on economic integration rather than political integration. After the Messina Conference in 1955, Paul Henri Spaak was given the task to prepare a report on the idea of a customs union; the so-called Spaak Report of the Spaak Committee formed the cornerstone of the intergovernmental negotiations at Val Duchesse conference centre in 1956. Together with the Ohlin Report the Spaak Report would provide the basis for the Treaty of Rome. In 1956, Paul Henri Spaak led the Intergovernmental Conference on the Common Market and Euratom at the Val Duchesse conference centre, which prepared for the Treaty of Rome in 1957.
The conference led to the signature, on 25 March 1957, of the Treaty of Rome establishing a European Economic Community. The resulting communities were the European Economic Community and the European Atomic Energy Community; these were markedly less supranational than the previous communities, due to protests from some countries that their sovereignty was being infringed. The first formal meeting of the Hallstein Commission was held on 16 January 1958 at the Chateau de Val-Duchesse; the EEC was to create a customs union while Euratom would promote co-operation in the nuclear power sphere. The EEC became the most important of these and expanded its activities. One of the first important accomplishments of the EEC was the establishment of common price levels for agricultural products. In 1968, internal tariffs were removed on certain products. Another crisis was triggered in regard to proposals for the financing of the Common Agricultural Policy, which came into force in 1962; the transitional period whereby decisions were made by unanimity had come to an end, majority-voting in the Council had taken effect.
Then-French President Charles de Gaulle's opposition to supranationalism and fear of the other members challenging the CAP led to an "empty chair policy" whereby French representatives were withdrawn from the European institutions until the French veto was reinstated. A compromise was reached with the Luxembourg compromise on 29 January 1966 whereby a gentlemen's agreement permitted members to use a veto on areas of national interest. On 1 July 1967 when the Merger Treaty came into operation, combining the institutions of the ECSC and Euratom into that of the EEC, they shared a Parliamentary Assembly and Courts. Collectively they were known as the European Communities; the Communities still had independent personalities although were integrated. Future treaties granted the community new powers beyond simple economic matters which had achieved a high level of integration; as it got closer to the goal of political integration and a peaceful and united Europe, what Mikhail Gorbachev described as a Common European Home.
The 1960s saw the first attempts at enlargement. In 1961, Ireland and the United Kingdom applied to join the three Communities. However, Presi