Dollar Cost Averaging is a strategy that involves purchasing a fixed amount of an investment at a predetermined interval.

• A. Asset Allocation
• B. Diversification
• C. Dollar Cost Averaging
• D. Certification

Answer: (C)

The idea being tested is how dollar-cost averaging works. This approach means investing a fixed dollar amount at regular intervals, regardless of the investment’s price. Because of this, when prices are low you buy more shares, and when prices are high you buy fewer shares. Over time, this can lead to a lower average cost per share and helps avoid trying to time the market.

The other options describe different concepts: asset allocation is about spreading investments across asset classes; diversification is about spreading risk within a portfolio; certification is a credential. None of these describe the practice of committing a constant dollar amount to invest at set intervals, which is what dollar-cost averaging is.