Stocks Intermediate: Types of Stock Accounts

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1.
A wrap account is one in which all associated costs are wrapped into a single fee.
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True. A wrap account is a brokerage account in which all associated costs--broker commissions, money management fees, and transaction costs--are wrapped into a single fee.
2.
A call option grants the owner the right to buy 100 shares of a particular security at a pre-determined price.
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True. A call option grants the owner the right to buy 100 shares of a particular security at a pre-determined price.
3.
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.
4.
A margin account is an account in which the investor pays slightly more than the value of the securities being purchased.
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False. A margin account is one in which the investor does not have to pay the full value of the trade. Instead, the investor borrows.
5.
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.