Dollar Cost Averaging
Quantitative Finance
Level
2
Jimmy decides he wants to do a bit of dollar cost averaging at the gas station.
Which of the following actions should he take when he goes to the gas station?
Image Credit: www.colourbox.com
Spend the same amount of money each time
Buy the same amount of gas every time
Fill up every time
Always buy a bit more gas than last time.
Always buy a bit less gas than last time.
Average out all of the previous times and buy that much.
Get a burger and pretzels
None of these answers
This section requires Javascript.
You are seeing this because something didn't load right. We suggest you, (a) try
refreshing the page, (b) enabling javascript if it is disabled on your browser and,
finally, (c)
loading the
non-javascript version of this page
. We're sorry about the hassle.
1 solution
Dollar cost averaging is the practice of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. The price of gas can fluctuate just the way stock or any other investment might. So he should Spend the same amount of money each time