In finance, the average purchase price refers to the average price at which an investor has purchased a particular security or investment over a given period.
For example: If you buy 100 securities at EUR 15 per security, then later 200 securities at EUR 10 per security, the average purchase price will be calculated by adding together the total cost of the two purchases:
EUR 1.500 + EUR 2.000 = EUR 3.500
Then divided by the total number of securities (100 + 200 = 300)
The APP will be EUR 11,67/security
Monitoring the APP can be a useful way for investors to assess the performance of their investments, as well as being useful for tax purposes. The APP is also used to determine the break-even point or minimum price at which the investor must sell the investment to avoid a loss.
Note that this is a simplified example that does not take any additional costs into account.
