SIE practice questioneasyAgency Trades and Commissions
When a broker-dealer acts as an agent in a transaction, the firm charges the customer a:
- AMarkdown
- BMarkup
- CSpread
- DCommission✓ Correct answer
Explanation
Why D — Commission
When acting as an agent, the broker-dealer facilitates the trade between buyer and seller without using its own inventory. The firm charges a commission for this service. Markups and markdowns are charged when the firm acts as principal, and the spread is the difference between bid and ask prices.
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