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Strategy Beginner: Dollar Cost Averaging

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1.
Dollar cost averaging is the practice of _______.
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Putting the same amount of money into an investment each period. In other words, you are buying the same dollar amount of shares each period.
2.
With dollar cost averaging, when the share price rises, you buy more shares, and when the share price falls, you buy fewer shares.
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False. You always invest the same dollar amount, so when the share price rises, you buy fewer shares, and when the share price falls, you buy more shares.
3.
In dollar cost averaging, what is the formula for average price per share?
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Total amount paid divided by number of shares bought. This yields the average price you paid per share.
4.
Imagine that you have bought $800 worth of stock shares over four months. Due to price fluctuations, the number of shares you bought was 195. What is the average price per share?
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$4.10. Divide the total amount you paid ($800) by the number of shares bought (195).
5.
To use dollar cost averaging, you must invest in the same _______ every time you invest.
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Dollar amount of shares. When using dollar cost averaging, you must invest the same amount of money every time you invest.