General Securities Representative (Series 7) Practice Exam – Your All-in-One Guide to Exam Success!

A cash account requires that all transactions be settled in full using available cash, meaning that any purchases made must be paid for in full at the time of the transaction. In this context, buying stocks, buying options, and purchasing mutual funds are all transactions that can be executed in a cash account as they require immediate payment.

Buying on margin, on the other hand, involves borrowing money from a brokerage firm to purchase additional securities, which allows an investor to trade with funds that exceed what they have in their cash account. This is not permitted in a cash account; it is specifically a feature of a margin account where an investor can leverage their investments and potentially enhance returns (though it also increases risk).

Therefore, buying on margin is the transaction that is not typically executed in a cash account, as it directly contradicts the fundamental principle of a cash account's requirement for full cash payment at the time of the transaction.