Which one of the following is a source of profit for a swap dealer?
A) Commission charged on the sale of bonds
B) Bid-ask spread
C) Margin account
D)Option premium

Question

Quizplus · Accepted Answer

The bid-ask spread is the difference between the price a dealer is willing to pay for a security (bid price) and the price at which he is willing to sell it (ask price). This spread represents the dealer's profit margin on the trade. Commission charged on the sale of bonds may be a source of revenue, but not necessarily profit. Margin accounts are used to finance trades and incur interest expense for the dealer. Option premium is a source of revenue for an options dealer, but not a swap dealer.

Which One of the Following Is a Source of Profit