Fixed income transaction costs

CFA Level III
#1

Hi,

In a recent mock I took they suggest that fixed income transaction costs are lower than for other asset classes. What about illiquidity of such asset class (bid ask spread, price of time to get a quote for a specific bond and so on).
Besides don’t remember having read that in the curriculum.

Any thoughts?

#2

Could you please confirm that it was transaction cost and not trading cost?

I would think that transaction cost for fixed income is going to be high due to all the reasons you mentioned but trading cost is going to be lowest.

Equity is order driven and fixed income is quote driven.

#3

Transactions costs. To me and logically they should involve both direct and indirect costs related to the transaction. But I don’t have the answer yet.