Tuesday, December 28, 2010

Average Cost

Average cost is one cost basis for working out the starting price of your mutual fund shares. Using this method you need to track the price and amount you purchased during any purchases including reinvestment of dividends and capital gains. Then you simply calculate the weighted average cost by adding the total purchase cost of each purchase and dividing that by the total number of shares you purchased.

Synonyms: Average price, Dollar cost averaging, Starting price

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