Strategy Beginner: Dollar Cost Averaging

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1.
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.
2.
Compared to buying the same number of shares each period, if you invest the same amount of money instead with dollar cost averaging, you will usually _________.
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Pay less per share. When you average the prices you pay, you find that you have paid less per share.
3.
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).
4.
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.
5.
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.
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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.