Fixed income question income, question, invest

RepoToronto

Suppose you are given 1 billion Japanese yen. There is no immediate liquidity needs. Should we keep the money in cash or invest it in longer duration bonds?

SpyAli

– You have 1 billion Japanese yen.
– There is no immediate liquidity needs.
Should I invest money in cash or invest it in longer duration bonds?
Isn’t that way too broad a question??
Short-term duration vs Long-term duration bond? Is the yield upward sloping or flat or downward sloping? There’re so many variables to look at.

Roflnadal

I understand the investment of the fund should be in a portfolio perspective. But for a mere comparison of the two investment options, money market and JGBs, the focus should be on market value risk, no? Longer duration bonds bear more risk when yield changes.

RMontgomery

so what’s the main difference in investing in the two options? it’s merely market value risk is different, right? since both are Japanese government issued securities.

dirk01

No way to answer that question without looking at the client’s IPS
But if I were given 1 bln yen, I’d be selling it short (given where the yen appears to be headed….)