- CFA Exams
- CFA Level I Exam
- Topic 5. Equity Investments
- Learning Module 37. Security Market Indexes
- Subject 2. Index Construction and Management
CFA Practice Question
Which type of indices tend to have the contrarian effect?
A. Fundamentally weighted indices
B. Equally weighted indices
C. Market-capitalization-weighted indices
Explanation: Portfolio weights will shift away from securities that have increased in relative value and toward securities that have fallen in relative value whenever the portfolio is rebalanced.
User Contributed Comments 3
| User | Comment |
|---|---|
| gmanoj | Contrarian style is an investment style that goes against prevailing market trends by buying assets that are performing poorly and then selling when they perform well. |
| farhan92 | ^ the phrase "buy when there's blood in the streets" comes to mind. |
| markbucfa | gmanoj: Attribute the definition you've provided to Investopedia. You will be cited for plagiarism if you don't do. |