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.
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.
Each time an investor executes a transaction in a cash account, the broker responsible for handling that trade is _______.
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Paid a commission. Each time an investor executes a purchase or sale of a security in a cash account, the broker responsible for handling that trade is paid a commission, calculated as a percentage of the total transaction value.
4.
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.
5.
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.