Stocks Intermediate: Types of Stock Accounts

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1.
To churn an account is to _______.
Choose wisely. There is only one correct answer.
Execute trades for the sole purpose of generating commissions. To churn an account is to execute trades for the sole purpose of generating commissions.
2.
Because a margin account charges interest, there are no additional commission charges as in other stock accounts.
Choose wisely. There is only one correct answer.
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.
3.
The investor information required to establish a cash account includes all of the following except _______.
Choose wisely. There is only one correct answer.
The investors occupation. In order to establish a cash account, the investor is responsible for providing basic personal information, including his or her name, address and phone number, a tax ID or Social Security number, and proof that he or she is of legal age.
4.
A "special miscellaneous account" is an account that allows a margin trader to monitor his or her borrowing power.
Choose wisely. There is only one correct answer.
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.
5.
A call option grants the owner the right to buy 100 shares of a particular security at a pre-determined price.
Choose wisely. There is only one correct answer.
True. A call option grants the owner the right to buy 100 shares of a particular security at a pre-determined price.