Question
Imagine that your parents give you $1000 so that you can gain some experience in the stock market. You have identified a company that you
Imagine that your parents give you $1000 so that you can gain some experience in the stock market. You have identified a company that you think has good growth prospects, with shares currently selling at $10 each. You could immediately buy 100 shares, but you remember something called dollar-cost averaging. You decide to invest $250 four times: today, in three months, in six months, and in nine months. After three months, the stock is selling at $6.25. After six months, however, the stock is selling at $12.5 per share, and after nine months it drops to $6.25. After a full year, the stock is again trading at $12.5 per share. Ignoring any commissions or trading fees, approximately how much are your stocks worth after a full year?
a. $1,425
b. $1,563
c. $781
d. $1,140
e. $1,250
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