Average Cost Basis Method

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Dictionary Says

Definition of 'Average Cost Basis Method'

A way of calculating cost basis when figuring out gains or losses from a sale of mutual fund shares. This is done by adding up the number of shares owned as well as the total dollar amount of the shares; the dollar amount is divided by the number of shares. This number (the average cost basis) is then multiplied by the number of shares sold and compared to the actual sale amount to compute a gain or loss.   
Investopedia Says

Investopedia explains 'Average Cost Basis Method'

Many mutual fund companies include an average basis number on the confirmation statement, which is mailed to the client whenever shares are purchased or redeemed. The shareholder is not required to use this method.
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'Average Cost Basis Method'

  • How do you calculate the cost basis for a mutual fund over an ...

    http://www.investopedia.com/ask/answers/06/mutualfundcostbasis.asp
    ... The average cost single category method calculates the cost basis by taking the
    total investments made, including dividends and capital gains, and dividing the ...

  • Don't Lose Your Shirt On Mutual Fund Sales

    http://www.investopedia.com/articles/mutualfund/cost-basis-mutual-funds.asp
    ... Average basis (double category) - This rarely-used method is very similar to the ...
    The average cost of shares in each category is then computed separately. ...

  • Using Tax Lots: A Way To Minimize Taxes

    http://www.investopedia.com/articles/05/taxlots.asp
    ... shares, there are three common ways to identify the cost basis of the shares that
    you are selling: FIFO (first-in, first-out), average-cost method and specific ...

  • CFA Level 1 Study Guide - Microeconomics - Marginal and Average ...

    http://www.investopedia.com/exam-guide/cfa-level-1/microeconomics/marginal-average-total-cost-curve.asp
    ... Standard VA: Diligence And Reasonable Basis; 1.19 Standard ... Modifying Output; 3.14
    Marginal and Average Total Cost ... Capital; 4.7 Economic Rent and Opportunity Cost; ...

  • Valuing A Company Using The Residual Income Method

    http://www.investopedia.com/articles/fundamental-analysis/11/residual-income-model.asp
    ... driver behind the use of the residual income method. ... is profitable on an accounting
    basis, it may ... DCF approach which uses the weighted average cost of capital ...

  • An Introduction To Corporate Valuation Methods

    http://www.investopedia.com/articles/financial-theory/11/corporate-project-valuation-methods.asp
    ... which is higher than the weighted average cost of capital ... cost of capital = accept
    project IRR < cost of capital ... to compare projects on the basis of returns on ...

  • CFA Level 1 Study Guide - Financial Statements - Income Statement ...

    http://www.investopedia.com/exam-guide/cfa-level-1/financial-statements/income-statement-non-recurring.asp
    ... Standard VA: Diligence And Reasonable Basis; 1.19 Standard ... Modifying Output; 3.14
    Marginal and Average Total Cost ... Capital; 4.7 Economic Rent and Opportunity Cost; ...

  • CFA Level 1 Study Guide - Financial Statements - Revenue ...

    http://www.investopedia.com/exam-guide/cfa-level-1/financial-statements/revenue-recognition-methods.asp
    ... Standard VA: Diligence And Reasonable Basis; 1.19 Standard ... Modifying Output; 3.14
    Marginal and Average Total Cost ... Capital; 4.7 Economic Rent and Opportunity Cost; ...

  • CFA Level 1 Study Guide - Corporate Finance - The Cost of Capital ...

    http://www.investopedia.com/exam-guide/cfa-level-1/corporate-finance/cost-of-capital.asp
    ... Standard VA: Diligence And Reasonable Basis; 1.19 Standard ... Modifying Output; 3.14
    Marginal and Average Total Cost ... Capital; 4.7 Economic Rent and Opportunity Cost; ...

  • Series 26 Study Guide - Mutual Fund Accounts - Selling Mutual Fund ...

    http://www.investopedia.com/exam-guide/series-26/mutual-fund-accounts/mutual-fund-shares.asp
    ... identification - The investor may choose to sell specific shares in order to minimize
    or maximize cost basis and therefore ... Average share cost - This is ...

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