SIE practice questioneasyTypes of Brokerage Accounts
Which of the following types of accounts allows an investor to borrow funds from a broker to purchase securities?
- ACash account
- BCustodial account
- CMargin account✓ Correct answer
- DRetirement account
Explanation
Why C — Margin account
A margin account allows investors to borrow money from the broker to buy securities, using the securities as collateral. Cash accounts do not permit borrowing—the investor must pay the full purchase price. Custodial accounts are managed for the benefit of a minor, and retirement accounts, like IRAs, are tax-advantaged savings vehicles with specific contribution rules but do not permit margin borrowing.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Account Types questions
- An investor wants to open an account for their 12-year-old child to manage a birthday gift inheritance. Which account…
- A parent opens a custodial account under UTMA for a minor child. Which statement is true?
- Which account type requires all transactions to be paid for in full by settlement date?
- Which account type allows an investor to purchase securities using both their own funds and borrowed funds from a…
- Which of the following is a qualified retirement account that offers tax-deferred growth and may be funded by an…
- A client is approved for option trading in a margin account. Which of the following is TRUE?
- Which joint account type allows either party to trade securities and withdraw funds?
- Which type of account would most likely be established for a minor child with a parent as custodian?