In investing, what does 'dollar-cost averaging' primarily refer to?
A
Investing a large lump sum when the market is at its lowest point.
B
Selling off investments quickly when the market is volatile.
C
Investing a fixed amount of money at regular intervals, regardless of the asset's price.
D
Only investing in assets that have a historical average return above 10%.
✓ Correct Answer: Option C
Dollar-cost averaging is an investment strategy in which an investor divides the total amount to be invested across periodic purchases of a target asset (e.g., stocks or mutual funds) to reduce the impact of volatility. It aims to reduce the average cost per share over time.
💡 Why is C) the correct answer?
The correct answer to the question "In investing, what does 'dollar-cost averaging' primarily refer to?" is Option C: Investing a fixed amount of money at regular intervals, regardless of the asset's price..
The other options — A) Investing a large lump sum when the market is at its lowest point., B) Selling off investments quickly when the market is volatile., D) Only investing in assets that have a historical average return above 10%. — are incorrect for this General Knowledge question. As explained above: Dollar-cost averaging is an investment strategy in which an investor divides the total amount to be invested across periodic purchases of a target asset (e.g., stocks or mutual funds) to reduce the i…
📚 About This General Knowledge Practice Question
This 3-level General Knowledge question from the Abbreviations & Full Forms topic is part of One Paper Preparation's free exam preparation library.
Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.
How to use this page: Read the question above, consider all four options (A through D),
then check the highlighted correct answer and explanation. For active timed practice, start a
free General Knowledge practice test
or use flashcards for spaced repetition review.