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2009 AM Q7 C

As reasons for choosing the contrarian strategy I’ve put:

1. The portfolio chooses to buy companies with lower market cap than the benchmark.

2. The portfolio includes companies with lower than average growth projections.

Why is this wrong?

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nakata wrote:

As reasons for choosing the contrarian strategy I’ve put:

1. The portfolio chooses to buy companies with lower market cap than the benchmark.

2. The portfolio includes companies with lower than average growth projections.

Why is this wrong?

Because they are looking for the reasons explained in the curriculum for contrarian strategies:

1) Industries depressed with no earnings–> EPS of EUR 0.02

2) Trading at P/B ratios below 1–> P/B ratio of 0.9