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1.
In dollar cost averaging, the formula for average price per share is this: total amount paid divided by number of shares bought.
True. Total amount paid and number of shares bought are the two factors that yield the average price per share.
2.
On the average, investing the same amount of money each period with dollar cost averaging allows you to pay less per share than you would if you had bought the same number of shares each period.
True. When you average the prices, you find that you have paid less per share than you would have if you had bought the same number of shares each period.
3.
Dollar cost averaging is the practice of _______.
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.
4.
When you invest the same amount of money each period with dollar cost averaging instead of buying the same number of shares, you will make more money, assuming you subsequently sell at a higher price.
True. When you dollar cost average, the price you pay per share is lower than the highest price paid, but higher than the lowest price paid. Your average cost per share will be lower this way -- and your gain will be higher -- than if you had bought the same number of shares each month.
5.
In dollar cost averaging, what is the formula for average price per share?
Total amount paid divided by number of shares bought. This yields the average price you paid per share.