Question

Regularly scheduled investments of the same dollar amount in fund shares will most likely result in a:

A) lower average price per share
B) higher average price per share
C) lower average return on investment
D) higher average return on investment

Answer 1

Regularly scheduled investments of the same dollar amount in fund shares will most likely result in a lower average price per share.

Step-by-step explanation:

Regularly scheduled investments of the same dollar amount in fund shares will most likely result in a lower average price per share. This is because when you invest the same amount of money at regular intervals, you will end up buying more shares when prices are low and fewer shares when prices are high. Over time, this strategy is known as dollar-cost averaging.

For example, let's say you have $100 to invest in a fund, and the share price is $10. You will buy 10 shares. If the price decreases to $5 in the next period, your $100 will buy 20 shares. On the other hand, if the price increases to $15, your $100 will buy only 6.67 shares. By consistently buying more shares at lower prices, you will lower your average price per share.