2009 AM Q7 C

CFA Level III
#1

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?

#2

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