Ch 13. ASSI Dollar-cost averaging is a systematic program of investing equal sums of money at regular intervals, regardless of the price of the investment. Investing by dollar-cost averaging means that you purchase number of shares when the share price is down. And you purchase number of shares when the price is up. Therefore, dollar-cost averaging allows you to purchase most of your investment shares at costs. Suppose that Felix is an investor using a dollar-cost averaging investment strategy. Each month Fellx invests $600, regardless of the price of the investment at that particular time. The following table shows how a dollar-cost averaging strategy would affect Felix's investment in a fluctuating market, a declining market, and a rising market. For each market type, calculate the average share price and the average share cost based on the information given in the table. Note: Round your answers to the nearest penny. Fluctuating Market Share Price Regular Investment Shares Acquired 20 Period 1: $600 $30 Period 2: 600 25 24 600 30 20 Period 3: Period 4: 600 25 24 Period 5: 30 20 600 $3,000 Totals: 108 $140 Average share price: Average share cost: S IS Regular Investment $600 Declining Market Share Price $30 Shares Acquired 20 24 600 25 25 24 600 Period 1: Period 2: Period 3: Period 4: Period 5 Totals: 30 600 20 15 40 600 $3,000 $115 138 $ Average share price: Average share cost: Rising Market Share Price $10 Regular Investment $600 Shares Acquired 60 Period 1: 40 Period 2: 600 15 600 Period 3: 20 30 500 Period 4: 25 24 20 Period 5 500 30 Totals: $3,000 174 $100 Average share price: Average share cost: s S Hints:. To calculate the average share price, divide the share price total by the number of investment periods. To calculate the average share cost, divide the total amount invested by the total number of shares purchased. Round your answers to nearest dollar. Enter all values as positive. . In the fluctuating market, Felix purchased a total of shares. At the end of the last investment period, his investment is worth per share, which means that Felix's final account balance would be s However, Felix has invested a total of $3,000, which means that he has received a of Round your answers to nearest dollar. Enter all values as positive. In the declining market, Felix purchased a total of shares. At the end of the last investment period, his investment is worth per share, which means that Felix's final account balance would be However, Felix has invested a total of $3,000, which means that he has received a of . If you are using a dollar-cost averaging strategy, and if you sell your investment shares when the market is significantly down, you will not profit. This means that you should keep investing as long as the longer-term prospect suggests an eventual increase in price. Round your answers to nearest dollar. Enter all values as positive. In the rising market, Felix purchased a total of shares. At the end of the last investment period, his investment is worth per share, which means that Felix's final account balance would be However, Felix has invested a total of $3,000, which means that he has received a of You will generally profit from dollar-cost averaging in a rising market becaue you will buy fewer and fewer shares as the price continues to rise