Stocks Intermediate: Types of Stock Accounts

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
A "special miscellaneous account" is an account that allows a margin trader to monitor his or her borrowing power.
Choose wisely. There is only one correct answer.
True. A special miscellaneous account is a kind of margin sub-account through which a margin trader can keep track of his or her current borrowing power.
2.
A call option grants the owner the right to buy 100 shares of a particular security at a pre-determined price.
Choose wisely. There is only one correct answer.
True. A call option grants the owner the right to buy 100 shares of a particular security at a pre-determined price.
3.
A short sale is executed when an investor thinks the value of the stock will _______.
Choose wisely. There is only one correct answer.
Drop. The investor sells the stock and then buys it back after it has fallen in price.
4.
The cash account is the most common type of securities account.
Choose wisely. There is only one correct answer.
True. The most common type of investor securities account is the cash account.
5.
One of the primary advantages of wrap accounts is that they are less expensive than other account types.
Choose wisely. There is only one correct answer.
False. The primary advantage of the wrap account is that there is no incentive for the broker to churn the account. However, investors should be aware that wrap account fees can be as high as 3 percent.