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Stocks Intermediate: Types of Stock Accounts

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1.
Each time an investor executes a transaction in a cash account, the broker responsible for handling that trade is _______.
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Paid a commission. Each time an investor executes a purchase or sale of a security in a cash account, the broker responsible for handling that trade is paid a commission, calculated as a percentage of the total transaction value.
2.
An arbitrage is the simultaneous purchase and sale of the same or equivalent security on two different markets.
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True. The objective is to take advantage of price discrepancies on the two markets.
3.
To churn an account is to _______.
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Execute trades for the sole purpose of generating commissions. To churn an account is to execute trades for the sole purpose of generating commissions.
4.
A short sale is executed when an investor thinks the value of the stock will _______.
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Drop. The investor sells the stock and then buys it back after it has fallen in price.
5.
The registered representative asks the investor to sign and return the options disclosure agreement _______.
Choose wisely. There is only one correct answer.
Within 15 days of account approval. The registered representative asks the investor to sign and return an options disclosure agreement within 15 days of account approval.
DONE
Introduction to Types of Stock Accounts Brokerage Cash Accounts Brokerage Margin Accounts Brokerage Wrap Accounts Brokerage Option Accounts Brokerage Specialty Accounts Summary of Types of Stock Accounts Find out what you learned