Trading, Accounts & Prohibited ActsQuestion 284 of 398
Compared with a basic cash account, what added document must a customer sign to open and use a margin account?
a.Nothing; margin accounts require no customer signature
b.A dividend reinvestment form only
c.A margin (credit) agreement, and typically a hypothecation agreement
d.A Form 10-K
Explanation
Unlike a basic cash account, a margin account requires the customer to sign a margin (credit) agreement, and typically a hypothecation agreement and loan consent. These document the borrowing relationship and the firm's rights, and are a prerequisite to margin trading.
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