The Difference Between a Cash Account and a Margin Account

question 57

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 with in 10 days,or the investor has to pay the entire amount with in thirty 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,a margin account allows the securities to be delivered to the customer.

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Definitions:

Predictable Manner

A way of acting or occurring that is expected based on patterns or previous experience, lacking in surprises or variability.

Direct Request Pattern

A pattern of organization that makes the request directly in the first paragraph.

Anticipated Reaction

A projected response or feeling expected from someone based on a specific action, statement, or event.

Direct Request Pattern

A communication approach that involves stating a request or need straightforwardly at the beginning, commonly used for clarity and efficiency.