Which of the following is commonly included in transaction costs?

Transaction costs refer to the expenses incurred when buying or selling securities. These costs can significantly impact the overall profitability of a trading strategy. Commissions and spreads are quintessential components of transaction costs. Commissions are the fees charged by brokers for executing trades, and spreads represent the difference between the bid price and the ask price in the market. Together, they directly affect the price at which trades are executed, making them integral to any discussion on transaction costs.

On the other hand, payroll expenses, insurance premiums, and office supplies may be necessary for the operations of a trading firm or financial institution but do not directly relate to the costs of executing a trade. They are more indicative of operating costs rather than the transactional nature of buying or selling securities. Thus, commissions and spreads are the only choices that directly reflect transaction costs in trading activities.