Stocks Intermediate: Types of Stock Accounts

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1.
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.
2.
In order for arbitrage to work, the security must be priced the same in the two separate markets.
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False. Arbitrage is done in an attempt to profit from temporary price differences in the security in the two separate markets.
3.
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.
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.
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.