The intent of dollar-cost averaging is to avoid buying high and selling low

Economics Dec 07, 2020

The intent of dollar-cost averaging is to avoid buying high and selling low.

True

False

Expert Solution

The answer is true. Dollar-cost averaging is the process of buying into an investment at regular intervals in order to reduce the effect of volatility on the purchase price. The preplanned purchases occur at the specific intervals, regardless of the current price of the stock, thereby eliminating the behavioral tendency to attempt to time the market.

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