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1.
In order for arbitrage to work, the security must be priced the same in the two separate markets.
Choose wisely. There is only one correct answer.
False. Arbitrage is done in an attempt to profit from temporary price differences in the security in the two separate markets.
2.
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.
3.
Because a margin account charges interest, there are no additional commission charges as in other stock accounts.
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False. Each time a margin investor executes a trade, the responsible broker is paid a commission, calculated as a percentage of the total transaction value.
4.
The registered representative asks the investor to sign and return the options disclosure agreement _______.
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Within 15 days of account approval. The registered representative asks the investor to sign and return an options disclosure agreement within 15 days of account approval.
5.
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.