CSI CSC2 Exam - Topic 8 Question 8 Discussion

Actual exam question for CSI's CSC2 exam

Question #: 8
Topic #: 8

[All CSC2 Questions]

When acting as a principal, how do investment dealers generate revenue?

AThrough commissions

BThrown tracers.

CThrough brokerage changes.

DThrough spreads on buy/sell prices.

Show Suggested Answer

Suggested Answer: D

When acting as a principal, investment dealers buy and sell securities for their own account. They generate revenue by earning a spread, which is the difference between the price at which they buy securities (bid price) and the price at which they sell them (ask price). This is distinct from their role as an agent, where revenue is earned through commissions on trades executed on behalf of clients.

Why Other Options are Incorrect:

A . Through commissions: Commissions are earned when acting as an agent, not as a principal.

B . Through tracers: This term does not apply to revenue generation.

C . Through brokerage charges: Brokerage charges relate to fees imposed on client accounts, not principal trading spreads.

Reference: CSC Volume 1, Chapter 1, 'The Principal and Agency Functions of Investment Dealers' explains how spreads generate revenue in principal trades.

by Lucille at Nov 23, 2025, 10:25 AM

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Magnolia

10 hours ago

Thrown tracers? Never heard of that.

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Eun

6 days ago

Commissions are a big part too!

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Hui

11 days ago

Ah, the age-old question of how investment dealers make their money. I'm just glad I don't have to worry about that - I'll stick to my day job as a professional couch potato.

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Leandro

16 days ago

C) Through brokerage changes? I think you mean "changes," not "changes." Gotta proofread those answers, folks.

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Clement

21 days ago

B) Thrown tracers? What is this, a war zone? I'll stick to the actual revenue sources, thanks.

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Jettie

26 days ago

D) Through spreads on buy/sell prices. Gotta love that sweet, sweet profit margin!

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Vallie

1 month ago

Commissions seem like a common way for dealers to earn, but I feel like spreads are more significant in their overall revenue strategy.

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Mari

1 month ago

I'm a bit confused about the options. I thought brokerage changes were a thing, but I'm not sure how they fit into revenue generation.

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Noble

1 month ago

I think I saw a similar question in our practice exam about revenue generation, and I believe it was definitely related to spreads.

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Barney

2 months ago

I remember we discussed how investment dealers primarily make money through spreads on buy/sell prices, but I'm not entirely sure if commissions play a role too.

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Chandra

2 months ago

Hmm, I'm a bit stumped on this one. I know investment dealers make money, but I'm not sure if it's through commissions, brokerage changes, or the buy/sell price spreads. I'll have to eliminate the options I'm less sure about.

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Ashley

2 months ago

I've got this! The answer is D, through the spreads on buy/sell prices. Investment dealers make money by buying low and selling high, capturing the difference between the two prices.

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Rocco

2 months ago

Okay, let me break this down. Investment dealers generate revenue, so it's not going to be something like "tracers" (B). I'm leaning towards either A or D, but I'm not totally confident. Gotta read the options closely.

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Pamella

2 months ago

They mainly make money through spreads on buy/sell prices.

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Shenika

2 months ago

A) Through commissions, of course! That's the bread and butter of investment dealers.

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Cristina

3 months ago

C seems off. Brokerage charges are less common, right?

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Reita

3 months ago

Ugh, I'm not sure about this one. Is it A, through commissions? Or maybe D, the spreads? I'll have to think this through carefully.

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Dana

3 months ago

Hmm, this seems like a straightforward question about how investment dealers make money. I think the answer is probably D - through the spreads on buy/sell prices.

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Brandon

3 months ago

All options have merit, but D feels most accurate.

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