Recommendations & StrategiesQuestion 51 of 100
Dollar-cost averaging involves:
a.Investing a lump sum all at once at the market peak
b.Investing a fixed dollar amount at regular intervals regardless of price
c.Timing purchases to buy only at market bottoms
d.Selling fixed amounts each month
Explanation
Dollar-cost averaging invests a constant dollar amount at regular intervals, buying more shares when prices are low and fewer when high, lowering the average cost per share over time. It reduces the risk of a poorly timed lump-sum entry. It is a systematic, discipline-based approach.
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