The Difference Between a Cash Account and a Margin Account

question 44

Multiple Choice

The difference between a cash account and a margin account is:

• A)a margin account allows the investor up to five days to pay for the entire purchase.
• B)a cash account gives the investor a 2% discount if they pay within 10 days, or the investor has to pay the entire amount within 30 days (2/10 net 30).
• C)a margin account allows the investor to borrow a percentage of the purchase price from the brokerage firm.
• D)a margin account is less risky to the investor.
• E)a cash account requires the stock be kept registered in street name, and a margin account allows the securities to be delivered to the customer.