Equity Investments Q88

0. Contrarian “effect” is most likely a characteristic of which of the following types of index weighting methods?

  • Option : C
  • Explanation : Fundamental weighting leads to indices that have a relative value tilt i.e. the contrarian „effect‟, where portfolio weights will shift away from securities that have increased in relative value and towards securities that have fallen in relative value whenever the portfolio is rebalanced.
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