Suppose you work as a junior analyst in one large Australian mining firm, which mainly export coal to Japan. The company has 100 million dollars to invest for up to 10 years in a financial instrument. Your boss, who knows a lot about finance, ask you to investigate the possibility to invest the full amount in one or more 10 year-bonds (for one or different countries) to diversify the risk of being totally exposed to the Japanese economy. Your task is to write a report about 10 years government bonds (you can choice one or more of the countries/bonds in the data folder) and provide a recommendation for the company to invest (for example 30% in bond of country X and 20% on bonds of country Y, etc). Other investments such as share will not be considered for the company. This is a great opportunity to test your understanding of this financial instrument and understand what factors you should consider for this investment. Given the objective of the firm to diversify from Japanese risk, recommend a portfolio investment for the next 10 years.

Domestic and international economic context (e.g. interest rates, exchange rates economic growth and inflation) Diversification Risk/return Liquidity