Stocks Intermediate: Types of Stock Accounts

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1.
A "special miscellaneous account" is an account that allows a margin trader to monitor his or her borrowing power.
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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.
Option trading involves _______.
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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.
3.
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.
4.
The cash account is the most common type of securities account.
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True. The most common type of investor securities account is the cash account.
5.
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.