Q: 6
David had $10,000 in his investment account with Dynamic Investments, a mutual funds dealer. On
June 28, David wants to buy 500 units in ABC Canadian Dividend Fund that has a Net Asset Value Per
Unit (NAVPU) of $14.10. His friend Robert suggests that he may get a better price if he used the
strategy of dollar-cost averaging. David then instructs his Dealing Representative to place a purchase
order for 100 units on the first of every month starting July 1st for the next 5 months.
The orders are executed at the following NAVPUs.
July 01, $14.00
Aug. 01, $14.50
Sep. 01, $15.00
Oct. 01, $14.25
Nov. 01, $16.50
Did David get a better purchase price following the dollar-cost averaging strategy compared to
making a lump-sum purchase of 500 shares on Jun 28, 20xx?
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