Quiz: Dollar Cost Averaging 3 questions · 80% to pass 1. Dollar cost averaging means:Buying only when prices are lowInvesting a fixed dollar amount on a regular schedule regardless of priceSelling when the market is up and buying when it's downWaiting for the perfect entry pointDCA means investing a fixed amount (e.g., $500/month) on a regular schedule no matter what the market is doing. You automatically buy more shares when prices are low and fewer when prices are high.2. The primary psychological benefit of DCA is:It guarantees profitsIt removes the emotional decision of when to investIt eliminates all market riskIt always outperforms lump-sum investingDCA's greatest value is behavioral: it eliminates the paralysis of trying to time the market. You invest on schedule, removing the emotional component that causes most investors to buy high and sell low.3. If you invest $500/month and the share price drops from $50 to $25, you:Buy the same number of shares as beforeBuy fewer shares because the price droppedBuy twice as many shares for the same $500Should stop investing until prices recoverAt $50/share, $500 buys 10 shares. At $25/share, the same $500 buys 20 shares. DCA automatically increases your share count when prices drop, lowering your average cost basis. Check answers Retake quiz Back to lesson Next lesson →