Strategy 3 - Dollar-cost averaging

Dollar-cost averaging is a systematic program of investing equal sums of money at regular intervals, regardless of the price of the investment.

Investing by dollar-cost averaging means that you purchase a greater number of shares when the share price is down. And you purchase a smaller number of shares when the price is up. Therefore, dollar-cost averaging allows you to purchase most of your investment shares at below average costs.

Suppose that Aiden is an investor using a dollar-cost averaging investment strategy. Each month Aiden invests $900, regardless of the price of the investment at that particular time. The following table shows how a dollar-cost averaging strategy would affect Aidens investment in a fluctuating market, a declining market, and a rising market. For each market type, calculate the average share price and the average share cost based on the information given in the table.

Note: Round your answers to the nearest penny.

		Fluctuating Market
	Regular Investment	Share Price	Shares Acquired
Period 1:	$900	$50	18
Period 2:	900	30	30
Period 3:	900	50	18
Period 4:	900	30	30
Period 5:	900	50	18
Totals:	$4,500	$210	114
		Average share price:
		Average share cost:

		Declining Market
	Regular Investment	Share Price	Shares Acquired
Period 1:	$900	$50	18
Period 2:	900	45	20
Period 3:	900	30	30
Period 4:	900	25	36
Period 5:	900	20	45
Totals:	$4,500	$170	149
		Average share price:
		Average share cost:

		Rising Market
	Regular Investment	Share Price	Shares Acquired
Period 1:	$900	$15	60
Period 2:	900	20	45
Period 3:	900	25	36
Period 4:	900	30	30
Period 5:	900	45	20
Totals:	$4,500	$135	191
		Average share price:
		Average share cost:

Hints:	To calculate the average share price, simply divide the share price total by the number of investment periods (5).
	To calculate the average share cost, simply divide the total amount invested by the total number of shares purchased.

Round your answers to nearest dollar. Enter all values as positive.

In the fluctuating market, Aiden purchased a total of shares. At the end of the last investment period, his investment is worth per share, which means that Aidens final account balance would be . However, Aiden has invested a total of $4,500, which means that he has received a of .

Round your answers to nearest dollar. Enter all values as positive.

In the declining market, Aiden purchased a total of shares. At the end of the last investment period, his investment is worth per share, which means that Aidens final account balance would be . However, Aiden has invested a total of $4,500, which means that he has received a of . If you are using a dollar-cost averaging strategy, and if you sell your investment shares when the market is significantly down, you will not profit. This means that you should keep investing as long as the longer-term prospect suggests an eventual increase in price.

Round your answers to nearest dollar. Enter all values as positive.

In the rising market, Aiden purchased a total of shares. At the end of the last investment period, his investment is worth per share, which means that Aidens final account balance would be . However, Aiden has invested a total of $4,500, which means that he has received a of . You will generally profit from dollar-cost averaging in a rising market because you will buy fewer and fewer shares as the price continues to rise.

My Home Ch 13: Assignment - Investment Fundamentals x 5 Courses Catalog and Study Tools . In the fluctuating market, Aiden purchased a total of 114 shares. At the end of the last investment period, his investment is worth $ per share, which means that Aiden's final account balance would be $ . However, Aiden has invested a total of $4,500, which means that he has received a of S Partner Offers BE Rental Options Round your answers to nearest dollar. Enter all values as positive. College Success Tips Career Success Tips In the declining market, Aiden purchased a total of 149 shares. At the end of the last investment period, his investment is worth $ per share, which means that Aiden's final account balance would be However, Aiden has invested a total of $4,500, which means that he has received a of S If you are using a dollar-cost averaging strategy, and if you sell your investment shares when the market is significantly down, you will not profit. This means that you should keep investing as long as the longer-term prospect suggests an eventual increase in price. ? Help Give Feedback Round your answers to nearest dollar. Enter all values as positive. In the rising market, Aiden purchased a total of 191 shares. At the end of the last investment period, his investment is worth $ per share, which means that Aiden's final account balance would be $ However, Aiden has invested a total of $4,500, which means that he has received a of $ . You will generally profit from dollar-cost averaging in a rising market because you will buy fewer and fewer shares as the price continues to rise. Grade It Now Save & Continue Type here to search (1) 7:40 PM 1/22/2021