A customer is dollar cost averaging by investing $400 per month into a mutual fund. Over 4 months, the customer has made purchas

Question

4 years ago

5

A customer is dollar cost averaging by investing $400 per month into a mutual fund. Over 4 months, the customer has made purchas

es at $13 per share, $10 per share, $8 per share, and $9 per share. By using this method, the customer has an average cost per share that is how much lower than the average price per share?

Business

1 answer:

Nostrana [21] · Answer 1 · 2021-12-16T17:45:36+03:00

Answer:

$0.32 per share

Explanation:

For computing the lower price per share first we have to find out the average cost per share which is shown below:

1 $400 ÷ $13 = 30.769

2 $400 ÷ $10 = 40.000

3 $400 ÷ $8 = 50.000

4 $400 ÷ $9 = 44.444

$1,600 = 165.213 shares

Average cost per share = Total cost ÷ total number of shares

= $1,600 ÷ $165.213 shares

= $9.68 per share

And, the average price per share is

= ($13 + $10 + $8 + $9) ÷ 4

= $10 per share

So, the lower value is

= $10 per share - $9.68 per share

= $0.32 per share