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Portfolio theory mainly studies how to optimize the allocation of assets under the premise of maximizing expected returns and minimizing investment risks. In view of the instability of the financial market, a diversified investment portfolio can help control the loss of the investment portfolio. In addition to paying attention to the safety and return of asset allocation, we cannot ignore the liquidity of assets, that is, their liquidity. Adding high-liquidity products to asset allocation, such as equity investment, can better control the financial cash flow in response to emergencies. One of the ways to make assets flow is to securitize assets and sell them to the market. In order to revitalize the stock assets, good investment efficiency is a necessary choice for financial investment. Various financial products and their derivatives continue to enter people’s vision. There are many financial products in reality, and optimizing the investment portfolio can bring high economic benefits. The purpose of this paper is to study the application of optimization algorithms in financial portfolio problems. (1) Monetary policy remains prudent and neutral. It is not easy to expect flooding, but flexibility is required in complex situations. (2) Financial resources are tilted towards innovation and transformation and capital markets, which is beneficial to the development of capital markets in the medium and long term. (3) Unblocking the transmission mechanism is conducive to lenient credit and tapping the wrong killing opportunities in private enterprise debt. (4) Banks and other financial institutions have moderate pressure to give benefits to entities, but in the long run, the interests of the two are consistent. (5) Finance risk prevention will continue, orderly breaking the rigid exchange and reshaping the financial structure and ecology. (6) The pace of opening up of the financial industry has accelerated, and the bond market investor structure has improved. In this paper, we establish different optimization schemes to compare and study the portfolio problem and then use MATLAB to solve the modeling and programming problem, calculate the highest return rate and the lowest risk value before and after optimization, and then make a comparative analysis to get a better optimization scheme. The results show that the genetic algorithm model is superior to the quadratic programming method in terms of risk control. The minimum risk of portfolio optimization through genetic algorithm has been reduced by about 40%, and the maximum return has increased by about 25%. The comprehensive optimization effect is better than the quadratic planning method and ultimately can obtain higher economic benefits. It can be seen that the optimization algorithm is of great significance for the comparative study of financial portfolio problems.

The authors empirically assessed the impact of the availability of industrial companies to financial capital on their innovative behavior. The relevance of the study is due to the need to develop new analysis tools and stimulate the innovative development of industrial companies in an unfavorable external environment. The aim of the study is to assess the relationship between the availability of financial capital for industrial companies and the possibility of transforming their innovative behavior into a more advanced innovative regime. The authors applied the method of regression analysis of survey data in 648 Russian industrial companies for 2015-2019 to test the three following hypotheses: 1. The financial performance of industrial companies depends on the model of innovative behavior; 2. Financial capital has a significant positive effect on the choice of a more advanced innovative behavior and on the performance of industrial companies; 3. Different availability restrictions to financial capital have a different impact on the choice of innovative behavior and the performance of industrial companies. The authors analyzed two types of restrictions on financial capital: light, when the rate of return from the company’s activities is below the lending interest rate; and strict, when the company does not have access to the credit market. The authors proved that the choice of a particular model of innovative behavior depends on the availability of financial capital of industrial companies. The conclusion is that different types of financial capital constraints affect the choice of a model of innovative behavior in different ways. The authors suggest allocating resources for innovation, development and launch of new products on the market even in conditions of limited access to financial capital. Alternatively, in the context of extremely limited financial capital, it is to develop imitation innovations in new or existing markets.

Mutual funds open up the door to diversified investments for individual investors in the stock and bond markets and minimize company-specific stock risk. Since mutual funds are managed by a team of investment professionals, they charge management fees to cover their operating costs, such as the cost of hiring and retaining investment advisors who manage funds’ investment portfolios. Since expenses are a charge against returns to investors, a fund with high fees must perform better than a low-cost fund to generate the same returns for the investor. Even small differences in fees can translate into large differences in returns when compounded over a period of time. This study examines whether higher advisory fee results in a superior rate of return for investors. If there is a link between advisory fee and returns, and are mutual fund investors paying attention? TOPICS:Mutual fund performance, manager selection, wealth management, equity portfolio management Key Findings • There has been a secular trend of declining advisory fees across the sample period. • Equity mutual funds’ 12-month total returns show more volatility than their advisory fee over the period of 2000 to 2017. • Advisory fees had a positive relation to the 12-month total returns, but in terms of causality, we did not find evidence that higher advisory fees are consistent with greater portfolio manager skill. In other words, paying more for advisory services in exchange for higher fund returns is not “worth it.”

The COVID-19 pandemic and the global recessions have reduced the investments in green projects globally that would endanger the achievement of the climate-related goals. Therefore, the post-COVID-19 world needs to adopt the green financial system by introducing new financial instruments. In this regard, green bonds—a type of debt instrument aiming to finance sustainable infrastructure projects—are growing in popularity. While the literature does not contest their effectiveness in fighting climate change, research highlights the high level of risks and low returns associated with this instrument. This study analyzes the green bond markets in different regions with a focus on Asia and the Pacific. It aims to fill the gap in the literature by conducting a comparative study of the characteristics, risks, and returns of green bonds based on the region. The study is based on theoretical background and empirical analysis using the data retrieved from Bloomberg New Energy Finance and the Climate Bonds Initiative. The empirical results are based on several econometrics tests using panel data analysis estimation methods, namely pooled ordinary least squares and generalized least squares random effects estimator. Our findings prove that green bonds in Asia tend to show higher returns but higher risks and higher heterogeneity. Generally, the Asian green bonds market is dominated by the banking sector, representing 60% of all issuance. Given that bonds issued by this sector tend to show lower returns than average, we recommend policies that could increase the rate of return of bonds issued by the banking sector through the use of tax spillover. In the era of post-COVID-19, diversification of issuers, with higher participation from the public sector and de-risking policies, could also be considered.

It is common to use the average excess return of equities over bonds estimated over long time periods as an expected equity risk premium on the grounds that going back far enough covers most possible economic scenarios. But although this data is useful in guiding the exercise of judgment, it cannot substitute for judgment. Adding more years of data to the near century of Canadian stock and bond returns that inform today's estimate of the equity risk premium will not produce a “random walk” for a simple reason: the historic bond series is the result of a specific historic monetary policy. This is particularly true of and important for the case of Canada, where today's very low current bond yields reflect the emergence of the Canadian dollar as a reserve currency as well as the impact of unconventional monetary policy elsewhere. After analyzing the historic record of the Canadian equity risk premium and noting the need for adjustments when this premium is applied to the current anomalously low Canadian long‐term bond yields, the author reaches the following conclusions: The historic Canadian equity risk premium is approximately 5.0% (based on arithmetic returns), which is slightly lower than the roughly 6.0% value for the U.S. The historic equity risk premium has not been constant because of obvious changes in the Canadian bond market. To some extent, the huge cycle in which bond yields began their increase from the 4.0% level starting in 1957, when markets were liberalized, and then fell back to the 4.0% level in 2007‐2008 completed an adjustment to changes in fiscal versus monetary policy. However, in 2016, average long Canada bond yields dropped to an anomalously low 1.8%, which is below the long‐term inflation target of the Bank of Canada, and have barely recovered since. It is difficult to view this as an equilibrium rate determined by private investors. Of the drop in bond yields, about 0.50% is unique to Government of Canada bonds as they became attractive to sovereign investors as a rare AAA‐rated issuer. Using an indicator variable for the post‐2010 years, a simple regression analysis indicates that current long Canada bond yields should be about 2.75% higher but for the recent changes. And for 2018, this means that the 2.35% average long Canada bond yield should have been about 5.0%. Apart from the impact of higher government deficits, this is consistent with average yields before the 2008 financial crisis. Adding an adjusted 5.0% long Canada bond yield to the historic equity risk premium in Canada of 4.50% gives 9.50% for the cost of the overall equity market or, given the Bank of Canada's target inflation rate of 2.0%, a real equity return of 7.5%, both slightly higher than the long‐run averages. In sum, the conventional practice of adding a historic market risk premium to the current low Canada long bond yields would impart a sharp downward bias to current equity cost estimates; use of this method would not be appropriate until long Canada bond yields increase to at least the 4.0% level.

This paper takes Internet insurance wealth management products as the research object, and selects the products of China Life Jiatian Tiantianying as the representative, and studies the influencing factors of the yield of such products through relevant time series empirical methods. The results show that the interbank lending rate, bond market, exchange rate, securities secondary market and insurance institution strength have different degrees of impact on the rate of return. The research in this paper will help to improve the theoretical methods of Internet wealth management products, especially in the insurance sector. At the same time, it can better help investors rationally choose the right products for investment and supervision to prevent market risks.

This paper provides a framework to endogenize rates of return for risk-free bonds and risky capital in an overlapping generation model. The rate of return on capital is endogenized by introducing idiosyncratic production shocks to avoid computation challenges associated with aggregate production shocks in the literature. The framework enables the interaction between financial markets and macroeconomic conditions in a production economy. Based on this framework, the paper first examines life-cycle portfolio choice without demographic change, and illustrates that several factors such as borrowing costs, labor income and production risk play important roles in life-cycle portfolios. The paper then investigates the impacts of population aging on macroeconomic conditions, life-cycle behaviors and financial market structures. The results show that population aging leads to higher capital-labor ratios, and reduces the rates of return on both assets. The bond market shrinks significantly, and capital decreases if the fertility rate declines but increases if the mortality rate declines, leading to structural change in financial markets. The impacts on life-cycle variables are quite different in the fertility and mortality cases particularly at the late stage of life.

This study proposes a theoretical modeling approach for analyzing the impact of government finance on bond market return in Nigeria. The overall result shows that government finance affects not only the rate of return on asset issued by government but also the rate of return on private securities.

We show theoretically how tax evasion is facilitated by informal credit market through tax deferment. Our model is empirically based. Using sham litigation, tax evaders earn a higher rate of return than the stipulated penalty rate for tax evasion while the government loses tax revenue. We propose an upfront part–payment of the disputed amount of tax as a solution to the form of tax evasion we describe.

This paper presents the results of a comparison of the rates of return on specific open-end debt investment funds in Poland with the rates of return on bank deposits, in light of different time horizons. A comparative analysis was conducted based on the quartiles of the empirical distributions of the rates of return on selected funds and bank deposits. The empirical distributions were obtained using a moving window of observation. The results were largely influenced by very high interest rates on bank deposits in Poland in the years 1995–2001 (in the case of the oldest funds), and by the boom in the bond market in the years 2011–2012 (for the youngest funds). The investment horizon turned out to be significant. The best and worst funds were identified.

1. Abstract for the theis paper "Climate Change Impacts of Renewable Energy Policies: the Roles of Capacity Constraints and Market Power". A recent literature of Green Paradox shows that green policy intended to alleviate the problem of climate change may turn to speed it up (Sinn, 2008). The goal of this paper is to examine the climate change impacts of renewable energy policies by focusing on capacity constraints of some renewable energies and market power in the fossil fuel sector, both of which turn out to play important roles in determining policy impacts on the time profile of fossil fuel supply as well as the time pattern of greenhouse gas (GHG) emissions. By recognizing the capacity constraints of renewable energies, in this paper, we distinguish renewable energies between capacity constrained renewable energies and abundant renewable energies, and study their price policies and quantity policies in competitive market and non-competitive market. We show that the Green Paradox can only be confirmed in the benchmark case. Moreover, after considering the two factors mentioned, Green Paradox may not exist: the capacity constraints help renewable energy to delay the fossil fuel use to the distant future and the existence of market power changes the optimization rule of fossil fuel owners as well as their response to renewable energy policies.3. Abstract fo the thesis paper "Health and Precautionary Savings in the Pollution-Growth". We study the pollution-economic growth nexus from the perspective of health and precautionary savings. We first establish empirical support from Chinese data that higher pollution levels are associated with high savings rates. We then construct an overlapping-generations model in which agents save more in response to the higher pollution-induced health risk and the increased saving in turn leads to more investment, and thus more pollution. Such a path may appear to be sustainable in terms of economic growth, but the increased pollution makes the welfare level unsustainable. We study three kinds of policy interventions: private insurance achieves full risk sharing but does not reduce pollution; Pay-as-you-go health insurance reduces pollution but can only achieve partial risk sharing; pollution tax reduces pollution, but introduces an additional distortion in the rate of return to capital. A tax on pollution is most effective when the tax revenue is distributed to the old and sick. Even when double dividends do not exist in a static setting, they may still arise in a dynamic setting via its effects on savings behavior.3. Abstract for the thesis paper "Optimal Education Policies under Endogenous Borrowing Constraints". When young students face exogenous borrowing constraints (incomplete markets) on education loans, the simultaneous establishment of a education subsidy and an old-age pension has been shown to restore the complete market allocation (Boldrin and Montes, 2005). If the borrowing constraint is endogenous, owing to limited commitment of repayment and inalienability of future human capital (as in Kehoe and Levine, 1993), Andolfatto and Gervais (2006) by means of an example, argue that the education-subsidy-cum-pension scheme distorts the credit market, and hence, fails to restore the complete market allocation. In this paper, I show that the complete market allocation can be achieved even with endogenous borrowing constraints. The result broadens the rationale for a two-armed (education and pension) welfare state to a much wider class of economies.

Financial markets are connected well these days. One class assets’ price performance is usually affected by movements of other classes of assets. The liquidity conduction mechanism usually is: if capital surface of money market is tight, investors may dump short-term treasury bonds to exchange additional liquidities. It may affects the performance of treasury bonds’ yield of maturity. Credit bonds’ return rate thus will level up hysteretic. Financing cost of companies accordingly raise, then throws effects on their stock prices. However, situation changes along with increase in complexity of markets’ behaviors these days. In order to model movements of assets’ price performance, analysis of linkage between different markets is thus becoming more and more important. Nothing like stock market, money market or bond market is an over-the-counter market, where assets’ prices are often presented in the form of classes of discrete quotations with trader’s subjective judgements, thus are hard to analyze. Given concern to this, we define the Type 2 fuzzy random variable (T2 fuzzy random variable) to quantify those bid/offer behaviours in this paper. Moreover, we build a T2 fuzzy random support vector regression scheme to study relationships between these markets. T2 fuzzy random support vector regression is developed from traditional support vector regression and is able to cope with fuzzy data, which has less computation complexity and better generalization performance than linear algorithms.

In 2016, Russia's stock market, in terms of its rates of return, set a world record among all the other stock markets. Over that year, the RTS Index gained 52.3%, and the MICEX Index –26.8% (Fig. 1). The faster growth rate of the RTS Index, which reflects the price of shares in US dollar terms, can be explained by the ruble's strengthening in 2016. The other forces behind the growth of the Russian stock indexes were the rising oil prices, the inflow of non-residents' money in response to the strengthening ruble and the stably high key interest rate, and investor expectations of recovery economic growth.

This article studies the decisive mechanism of the Internet financial interest rate. Considering the possibility of basic symmetry for the credit information in the internet financial market with the application and development of the big data technology, a Nash Bargaining Module is established in the article, which includes the main decisive factors of the Internet financial interest rate (the program natural risk, program rate of return, loan period, loan scale, loan urgency, operating capacities of the borrower, the competition of the credit market, and the regime risk) as variables for analysis of their effects on the internet financial interest rates. According to relevant researches, the uncertainty of the loan projects in themselves and the costs for the implementation of secured credit contracts, rather than the reverse selection and moral risks arising from information asymmetry, form the main issues of the Internet financial interest rate.

The pattern of debt flows to peripheral European Monetary Union members seems puzzling: they are mostly indirect and channeled through the large countries of the European Monetary Union. This paper examines to what extent the introduction of the euro and the elimination of the intra-area currency risk can explain this puzzle. A three-country dynamic stochastic general equilibrium framework with endogenous portfolio choice and two currencies is developed. In the equilibrium, the core members of the European Monetary Union emerge as the main group of lenders to the peripheral European Monetary Union members. Outside lenders are pushed from the periphery debt markets because of currency risk. The model generates a pattern of debt flows consistent with the data despite the absence of any exogenous frictions or market segmentations.

This report sets forth details of a financial recovery plan designed to help Vietnam Electricity (EVN), and the Vietnamese power sector more generally, to address a series of complex and interconnected challenges over the next 3 to 10 years. These challenges are operational and institutional as well as financial, and will lead to fundamental changes over time in the way that EVN and the overall power sector operate.

Using the universe of all externally issued bonds by corporates and sovereigns in emerging and developing economies during 2000-14, this paper analyzes various issuance trends, including the unprecedented post-crisis surge. The paper focuses on external issuance at the country-industry and individual bond levels and finds that global factors matter greatly for emerging and developing economies issuance. A decrease in U.S. expected equity market (or interest rate) volatility, U.S. corporate credit spreads, and U.S. interbank funding costs and an increase in the Federal Reserve’s balance sheet (i) raise the odds that the monthly issuance volume of a country-industry is above its historical average; (ii) decrease individual bond yields and spreads; and (iii) raise bond maturities, after controlling for country pull factors, bond characteristics (for example, type of issuer, industry, and riskiness). Additionally, we document support that the risk-taking channel of exchange rate appreciation also operates for external bond issuance. Moreover, while the paper finds that country pull factors affect the impact of global factors, it does not find consistent evidence for this across the board. This result suggests that, during loose global funding conditions, flows are mostly driven by push factors and do not systematically discriminate between emerging and developing economies. Taken together, the findings suggest that although issuers might be able to benefit from benign international funding conditions, the large issuance volumes, currency risks, and high exposure to global factors could pose external and domestic challenges for policy makers, particularly when global cycles reverse.