Which of the following statements about investment strategies is true? Constant proportion portfolio insurance is a:
A) contrarian strategy, whereas constant mix is a momentum strategy.
B) momentum strategy, whereas constant mix is a contrarian strategy.
C) contrarian strategy as is constant mix.
D) momentum strategy as is constant mix.

Question

Quizplus · Accepted Answer

Constant proportion portfolio insurance (CPPI) is a momentum strategy because it involves increasing exposure to risky assets as their prices rise. In contrast, a constant mix strategy is a contrarian strategy because it involves rebalancing to maintain a fixed asset allocation, buying more of the asset that has decreased in value and selling some of the asset that has increased in value.

Which of the Following Statements About Investment Strategies Is True