Investment strategy of dollar cost averaging

Assignment Help Financial Management
Reference no: EM131081483

Discuss how strictly adhering to an investment strategy of dollar cost averaging over time should always result in a lower average cost to the investor than if a share averaging strategy was followed Describe the market environment when the investment strategies of dollar cost averaging and bond laddering work best?

Reference no: EM131081483

Questions Cloud

Investment in threading equipment to get the project started : Consider a project to supply Detroit with 40,000 tons of machine screws annually for automobile production. You will need an initial $5,600,000 investment in threading equipment to get the project started; the project will last for six years.
Different derivative security tools involved in hedging : Analyze the different derivative security tools involved in hedging, briefly explaining how each are used to attain its objective to lower risk. Why? Discuss the implications of employing portfolio insurance in an investment portfolio.
Future account value after-tax and after-inflation : What would be your future account value (after-tax and after-inflation) if you invested $125 each month into a growth mutual fund for 20 years? Assume an average annual rate of return of 12.5 percent. Assume a combined federal and state income tax of..
What should the stock sell for if required rate of return : The law firm of Nab-bem and Robb is considering selling stock. It has past dividends of 2011 - $1.15, 2012 - $1.27, 2013 - $1.38, 2014 - $1.47. What should the stock sell for if the required rate of return is 12%?
Investment strategy of dollar cost averaging : Discuss how strictly adhering to an investment strategy of dollar cost averaging over time should always result in a lower average cost to the investor than if a share averaging strategy was followed Describe the market environment when the investmen..
Yield to maturity on outstanding bonds : David Ortiz Motors has a target capital structure of 35% debt and 65% equity. The yield to maturity on the company's outstanding bonds is 12%, and the company's tax rate is 40%. Ortiz's CFO has calculated the company's WACC as 11.23%.
Basic operating characteristics of the futures market : How would you describe the origins and basic operating characteristics of the futures market? Please give examples that should reflect your understanding of the futures market. Explain what you know about how an investor can use a futures contract to..
What is the risk adjusted discount rate of a stock : What is the risk adjusted discount rate of a stock if the market return is 15%, the risk free rate is 7% and the stock's beta is 1.3? (This rate will be used to adjust the following project for risk) The initial investment is $150,000. Find the NPV: ..
Source of capital-capital components-cost : What is the weighted average cost of capital of Loopie Loafer Shoe Corp. if the firm has provided the following information: Source of Capital - Capital Components - Cost

Reviews

Write a Review

Financial Management Questions & Answers

  Company funds premiums on policies through bonuses

David owns 75 percent of the stock of Smith Industries, which is operated as an S corporation. Walter owns the remaining 25 percent. - David is the driving force behind the company. It is doubtful the company could survive without David. The company ..

  Risk-level equivalent to that of the overall market

Your portfolio has a beta of 1.27. The portfolio consists of 17 percent U.S. Treasury bills, 29 percent in stock A, and 54 percent in stock B. Stock A has a risk-level equivalent to that of the overall market. What is the beta of stock B?

  Calculate the present value of the contract

Carmelo Anthony may have the chance to sign what has been described as a $100 million dollar contract of 10 equal payments paid annually. Calculate the present value of the contract, assuming a 10% discount rate.

  Sequence of prices for a currency futures contract

Consider the following sequence of prices for a currency futures contract. Each contact involves 10,000 units of the foreign currency. The initial and maintenance margin requirements are USD 800 and USD 500, respectively.

  Capital structure consists solely of debt and common equity

WACC and Percentage of Debt Financing Hook Industries' capital structure consists solely of debt and common equity. It can issue debt at rd = 8%, and its common stock currently pays a $4.00 dividend per share (D0 = $4.00). T

  Major corporations implementing expert systems

Why are credit departments in banks and major corporations implementing expert systems? In your answer, indicate what advantages and disadvantages companies that implement such systems might anticipate.

  Costs and benefits of becoming a publicly traded firm

What do you think are the most important costs and benefits of becoming a publicly traded firm? What questions would you ask before advising whether or not an entrepreneur’s firm should go public?

  Consider prior to choosing between these methods

Joe was trying to decide which scheduling format to employ for his planning: AON or AOA. What are some of the issues that Joe should first consider prior to choosing between these methods?

  Whereas the risk-free rate of return

The beta of M Simon Inc., stock is 1.7, whereas the risk-free rate of return is 0.08. If the expected return on the market is 0.14, then what is the expected return on M Simon Inc?

  What is the tcf associated with the purchase of machine

Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its five year life. At the end of five years it is believed that the machine could be sold for $15,000. The..

  What is the estimated required rate of return on stock

Woidtke Manufacturing's stock currently sells for $40 a share. The stock just paid a dividend of $1.00 a share (i.e., D0 = $1.00), and the dividend is expected to grow forever at a constant rate of 5% a year. What stock price is expected 1 year from ..

  Calculate firms operating cycle and cash conversion cycle

Camp manufacturing turns over its inventory 5 times each year, has an average payment period of 35 days, and has an average collection period of 60 days. The firm has annual sales of $3.5 million and cost of goods sold of $2.4 million. Calculate the ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd