Dollar Cost Averaging Quiz

What is the primary concept behind Dollar Cost Averaging?

• Investing a fixed amount regularly

• Investing a large sum at once

• Investing only when the market is down

• Investing based on market predictions

How does Dollar Cost Averaging help investors?

• By investing only in high-performing stocks

• By ensuring maximum returns

• By removing the guesswork of timing the market

• By predicting market trends

In the example given, how many shares are bought in February if the share price drops to $10?

• 10 shares

• 8 shares

• 12 shares

• 5 shares

What is a potential downside of Dollar Cost Averaging?

• It guarantees losses during market dips

• It requires a large initial investment

• It may lead to buying shares at higher prices during a market uptrend

• It is only suitable for experienced investors

Why is consistency important in Dollar Cost Averaging?

• It guarantees higher returns

• It allows for regular investment regardless of market conditions

• It ensures buying shares at the lowest price

• It helps in predicting market highs