FINRA Series 6 Investment Company and Variable Contracts Products Representative ExaminationOpening and Maintaining Customer Accounts and Investment RecommendationsEasy
Which of the following forms must a customer sign to open a cash account for securities trading?
- ANo forms require a customer signature
- BNew Account Form
- CHypothecation Agreement
- DMargin Agreement
Show answer & explanationAnswer & explanation
Correct answer: A. No forms require a customer signature
For a cash account, customers are not required to sign any forms. The New Account Form is completed by the registered representative, and margin-related agreements are only for margin accounts.
Why the other options are wrong
- B. The New Account Form is completed by the registered representative, not signed by the customer for a cash account.
- C. The Hypothecation Agreement is only required for margin accounts, not cash accounts.
- D. The Margin Agreement is only required for margin accounts, not cash accounts.
Cash Account Opening
A type of brokerage account where all transactions must be paid in full by the settlement date without the use of borrowed funds.
- No borrowing of funds allowed.
- Customer signature not required on account opening forms.
- Suitable for all investors, including those who cannot open margin accounts.
Memory trick: Cash is king, no signature needed for the throne.