Canadian Securities Course (CSC) Level 1 Practice Exam

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Describe the difference between the buy side and sell side of bond trading.

The buy side involves trading with their own accounts
The sell side involves investment management firms
The sell side trades with investment bankers
The buy side involves asset management firms

The correct answer is: The buy side involves asset management firms

The correct answer is D because the buy side of bond trading typically involves asset management firms that purchase and hold securities on behalf of their clients. These firms are responsible for making investment decisions and managing portfolio risks to meet their clients' objectives. On the other hand, the sell side of bond trading involves investment bankers, broker-dealers, and market makers who facilitate trading by providing liquidity, market information, and execution services. This distinction highlights the roles and responsibilities of asset management firms on the buy side compared to those on the sell side of bond trading.