Averaging up is an investment strategy used in a rising market. It involves purchasing an increasing number of shares at higher prices to reduce the average cost of the investment. For instance, if shares are bought at $10, $13, $15, and $18, the average cost per share would be $14. This approach can assist investors in maximizing profits during favorable market conditions.
Averaging up is an investment strategy employed during a market upswing. It entails purchasing an equal number of shares at progressively higher prices to lower the average cost basis of the investment. For example, if an investor buys the same number of shares at $10, $13, $15, and $18, the average cost per share would be $14. This approach aims to enhance the potential profit of the investment. By acquiring more shares at higher prices, the investor is speculating that the stock will continue to appreciate in value. If the stock indeed continues to rise, the investor stands to make a greater profit compared to solely purchasing shares at lower prices. For instance, let’s assume an investor buys 100 shares of XYZ company at $10 per share. The stock price climbs to $15 per share, prompting the investor to employ the averaging up strategy. They purchase an additional 100 shares at $15 per share. As a result, the average cost per share becomes $12.50. If the stock price continues to increase to $20 per share, the investor will realise a larger profit than if they had only bought shares at $10 per share.
Averaging up refers to the practice of increasing the value of a settlement offer or judgment in a legal case.
Averaging up is often used when the initial settlement offer is deemed too low and the parties are trying to reach a more favorable agreement.
Yes, averaging up is a common strategy used by both plaintiffs and defendants in legal negotiations to try to reach a more favorable outcome.
Factors such as the strength of the evidence, potential damages, and the likelihood of success at trial are all considered when deciding whether to average up in a legal case.
Averaging up can be used in various types of legal cases, including personal injury, contract disputes, and employment law matters.
The potential benefits of averaging up include reaching a more favorable settlement, avoiding the time and expense of a trial, and reducing the uncertainty of litigation.
One potential risk of averaging up is that the other party may interpret it as a sign of weakness and become less willing to negotiate.
Consulting with a qualified attorney who has experience in negotiation and settlement strategies can help you determine if averaging up is the right approach for your case.
If the other party refuses to consider averaging up in negotiations, you may need to reassess your strategy and consider other options, such as proceeding to trial.
Yes, averaging up can be used in mediation or arbitration proceedings as a way to try to reach a more favorable resolution without going to trial.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 25th April 2024.
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