Answer: A fundamentally weighted index

**Explanation:** - **Option A (Incorrect):** A price-weighted index assigns arbitrary weights to each security based on its price. This method does not inherently produce a contrarian effect, as it does not systematically adjust weights based on relative value changes. - **Option B (Correct):** A fundamentally weighted index typically exhibits a contrarian effect. During rebalancing, the portfolio weights shift away from securities that have increased in relative value and toward those that have declined, as the index is constructed based on fundamental metrics rather than market prices. - **Option C (Incorrect):** A market-capitalization-weighted index tends to overweight stocks that have risen in price (potentially overvalued) and underweight those that have declined (potentially undervalued). This approach resembles a momentum strategy, as securities with higher price increases dominate the index weights over time.

Author: LeetQuiz Editorial Team