Customers Account

Question 1

Short sale

Answer 1

Happens when an investor sells shares of stock they currently do not own.

Considered bearish and can only be done in a margin account

Question 2

Cash account

Answer 2

Account where transactions are paid for with cash or cash equivalents within a specified time period.

Required to pay for securities T + 4 days

If trade cannot be paid for BD will sell the securities and charge the customer for any account losses

Question 3

3 things to open margin account

Answer 3

1. Margin agreement
2. Loan consent agreement
3. Credit disclosure document

Question 4

Wrap account

Answer 4

Established by investment adviser firm not BD

Client does not pay commissions or sales charges but assessed a fee that covers IA fees, administrative fees, and any trades.