What type of account permits trading without full payment?

A margin account allows trading without full payment because it enables investors to borrow money from a broker to purchase securities. This capability facilitates greater purchasing power, as investors can invest more than their actual cash on hand by using leverage. In a margin account, the investor is required to deposit a certain percentage of the total purchase price, known as the margin requirement, while the broker loans the remaining amount. This account type plays a significant role in the securities industry, allowing traders to potentially amplify their returns, but it also carries the risk of increased losses if the value of the securities declines.

In contrast, a cash account requires full payment for securities purchased, meaning investors must pay the entire purchase price upfront, with no borrowing allowed. Retirement accounts specifically focus on saving for retirement and often come with different tax benefits and restrictions, but they do not inherently allow for margin trading without full payment. An investment account could be either cash or margin, but the question specifically targets the type that permits trading without full payment, which is distinctly a margin account.