An investor based in Switzerland has historically found it profitable to invest in a portfolio of foreign corporate bonds, as their returns consistently exceeded the 1% yield on Swiss government bonds. Recently, the Swiss central bank increased its key interest rate, causing the yield on Swiss government bonds to rise to 4%. Assuming the expected returns and risks of the foreign bonds remain the same, what is the most likely consequence for the investor's strategy?
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An investor based in Switzerland has historically found it profitable to invest in a portfolio of foreign corporate bonds, as their returns consistently exceeded the 1% yield on Swiss government bonds. Recently, the Swiss central bank increased its key interest rate, causing the yield on Swiss government bonds to rise to 4%. Assuming the expected returns and risks of the foreign bonds remain the same, what is the most likely consequence for the investor's strategy?
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