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1.
The investor information required to establish a cash account includes all of the following except _______.
The investors occupation. In order to establish a cash account, the investor is responsible for providing basic personal information, including his or her name, address and phone number, a tax ID or Social Security number, and proof that he or she is of legal age.
2.
An arbitrage is the simultaneous purchase and sale of the same or equivalent security on two different markets.
True. The objective is to take advantage of price discrepancies on the two markets.
3.
Option trading involves _______.
More risk than traditional stocks and bonds. Because there is the potential for significant gains and losses, depending on the movement of the underlying stock, option trading involves significantly higher risk than traditional stocks and bonds.
4.
Because a margin account charges interest, there are no additional commission charges as in other stock accounts.
False. Each time a margin investor executes a trade, the responsible broker is paid a commission, calculated as a percentage of the total transaction value.
5.
To churn an account is to _______.
Execute trades for the sole purpose of generating commissions. To churn an account is to execute trades for the sole purpose of generating commissions.