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This paper examines the calendar effects on the Macedonian stock market’s daily returns during the period from 2006 to 2016. We focus on two market anomalies: the day of the week and the month of the year effect. Our aim is to find out if it is possible to earn higher return than the market return on the Macedonian Stock Exchange by using the alternative investment strategies related to Monday and January effects. We apply standard regression models with dummy variables for the effects in the mean returns. The results of the empirical analysis provide evidence for the existence of the Monday effect. However, the results did not indicate the existence of the January effect for the MBI 10 returns in the case of the Macedonian stock exchange. Keywords: calendar effects, market anomalies, day of the week effect, month of the year effect, market efficiency.

The cost of capital is a key variable in the financial analysis because it provides adequate assessment of the value of capital, and the value of individual securities. Hence, the important question is how to determine the cost of capital. Initial basis for determining the cost of capital is a determining risk free rate of return that is subject of research in the paper. Risk free rate of return exists when the expected rate of return is known with certainty, that means that realized proceeds of an asset is equal to the expected yields of the same asset. Rate of return on that asset is characterized as risk-free rate of return. To be able to adequately determine the risk free rate of return is necessary to determine the factors affecting its value, such as the currency in which it is expressed risk free rate of return and inflation. Therefore, the paper explored the reasons that may lead to inadequate assessment of the risk free rate of return due to inadequate treatment of the impact of currency and inflation in the analysis.

One of the key factors in investment analysis is the risk free rate of return. The interest rate on a government bond is considered a risk free rate of return, but the bond should be free from the risk of non- payment and reinvestment risk. However, the practical determination of the risk free rate can often be followed by a number of difficulties. Therefore, in this paper we discuss the difficulties faced by an analyst in determining the risk free rate of return on investment and portfolio analysis such as: - Lack of long-term government bonds on the capital market - Exposure to the risk of government default - Change the risk free rate of return over time. I. INTRODUCTION The numerous model od assessment of risk and rate of return start with a financial asset that is defined as the risk-free asset and therefore the expected return of that asset is used as a risk-free rate of return. Then, the expected returns of risky investments are determined in relation to the risk free rate, by adding expected risk premium. To understand what makes an asset as a risk free asset, it is necessary to consider the way of the risk is measured in investment decisions. Investors who buy assets (financial or real) expect to achieve a yield in the period in which they plan to hold the asset. Realized yields that investors will achieve in a given period may vary and differ from expected returns as a result of the risk that carries the appropriate investment. To some an investment to be characterized as risk-free it needs the realized yields always to be equal to the expected yield. Such investment is risk free because the realized returns do not vary around the expected yield, i.e. the standard deviation of realized yields in terms of the expected return is equal to zero. (1)

The main goal of this paper is to analyze the economic transition process in the Western Balkans (WB) in the period between 2000-2014. In this period, countries made radical political changes and economic reforms. They opened up to global trade, became increasingly export-oriented and expanded the role of the private sector. They also fulfilled criteria regarding convertibility of the current account, interest rates liberalization, price liberalization and small-scale privatization. However, reforms, such as large-scale privatization, competition policy and governance and enterprise restructuring, have still been delayed. In all WB countries except in Serbia, the inflation rate during this period is low, which is very big achievement taking into account the history of hyperinflation at the beginning of the transition. Furthermore, from the year 2000 onwards, the countries under review also made progress in real convergence, but the gaps in terms of income per capita relative to the euro area, remain large. In comparison with the 90s when the high political risk has been the main barrier for more foreign direct investment inflows, after the year 2000 foreign investors have become increasingly interested for this region. Key Words: Western Balkan, economic transition, market economies. JEL Classification: E24; E31; F16; F31; F32

Creation of a monetary union, carries along certain costs and benefits. Benefits of monetary union mainly stem from reducing transaction costs and eliminating exchange-rate uncertainty. On the other side, a country that joins a currency union, therefore gives up the opportunity to select a monetary policy, that it regards as optimal for its own circumstances. In this paper we explain the criteria of optimum currency area (OCA): degree of trade, similarity of business cycles, degree of labor and capital mobility and system of risk sharing. Viewed through the prism of these criteria, EMU is currently far from being an optimal currency area, especially in fulfillment criteria of labor mobility and fiscal integration. The aim of the paper is to highlight certain shortcomings of the EMU, such as its vulnerability to asymmetric shocks and its inability to act as predicted by the theory of optimum currency areas. Furthermore, we explain the reasons behind the difficulties that the euro area faced, and the problems that led to the outbreak of the sovereign debt crisis. At the end, we laid out several steps that could be taken or conditions that could be met in the euro zone in order to move toward optimization. Key words: euro zone, debt crisis, optimal currency area, business cycles, convergence criteria. JEL classification: F15, F21, F23, F31, F36, F44, F45

The capital presents one of the development factors of the national economy. Considering its limitations, however, permanent efforts have been made, both in theory and practice, to find new ways (instruments) to provide capital needed for achieving the developmental goals of the corporations, and indirectly, of the national economy. Thus, various types of securities have emerged as a source of capital, on the one hand, and as an investment instrument, on the other, by which the corporations make fructification of a part of their capital by investing in other corporations, national- and international-wide. Taking into account the complex nature of the securities, the capital fructification by investing in certain security portfolio requires extensive analysis in order to determine the optimal ratio between return and risk, two major components in the process of analysis and estimation of the efficacy of such investments.