Question

Indexes that generally will have a contrarian "effect" in that the 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:

a) Momentum indexes
b) Value indexes
c) Growth indexes
d) Quality indexes

Answer 1

Value indexes typically have a contrarian effect when the portfolio is rebalanced, shifting weights away from securities that have increased in value.

Step-by-step explanation:

Out of the given options, Value indexes typically have a contrarian effect when the portfolio is rebalanced. Value indexes focus on undervalued stocks, meaning they invest in securities that have fallen in relative value. When rebalancing, the portfolio weights shift away from securities that have increased in value and towards those that have fallen in value.