Account Types
What distinguishes a cash account from a margin account?
Cash = 100% payment. Margin = borrow up to 50% (Reg T).
Complete Analysis & Legal Rationale
The fundamental distinction is that cash accounts require customers to pay 100% of the purchase price by settlement date. No credit is extended, unlike margin accounts where customers can borrow a portion of the purchase price.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Cash accounts do not offer special trading privileges.
Matches the verified teaching point in the explanation.
Short selling requires a margin account, not a cash account.
Maintenance requirements apply to margin accounts, not cash accounts.
Official Standard: Outline-level citation pending rule-specific upgrade. Verify against current FINRA materials.