
Explanation:
The correct answer is A (€14.05) because the harmonic mean is the appropriate measure to calculate the average price per share when employing cost averaging. The harmonic mean accounts for the fixed investment amount and variable share prices, yielding an average cost of €14.05.
An investor makes fixed annual investments into a fund over three years with the following details: Year 1: €14.00 Year 2: €12.00 Year 3: €17.00 The investor's average cost per share is closest to:
A
€14.05.
B
€14.33.
C
€14.63.
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