Which One of the Following Statements Is Correct Concerning Dollar-Cost

question 14

Multiple Choice

Which one of the following statements is correct concerning dollar-cost averaging plans?

• A) The goal of dollar-cost averaging is current dividend income.
• B) Dollar-cost averaging is an active trading strategy.
• C) Dollar-cost averaging is a short- term trading strategy.
• D) The goal of dollar-cost averaging is long- term capital appreciation.

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Definitions:

Indirect Method

A method used to prepare the cash flow statement where net income is adjusted for changes in balance sheet accounts to calculate the cash from operating activities.

Term Deposit

A bank deposit with a fixed term and interest rate, where the money must remain deposited for a specified duration, incurring penalties for early withdrawal.

Cash Equivalent

Short-term, highly liquid investments that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

Insurance Proceeds

The money received by an insured party from an insurance company to cover a claim.