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The amount subtracted from the selling price of securities when they are sold to a dealer in the OTC market. Also, the discounted price of municipal bonds after the market has shown little interest in the issue at the original price.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


1. The amount by which a seller reduces a price for a product or asset in order to make it desirable for buyers. See also: Markup.

2. The difference between the price a broker-dealer charges for a retailer to buy a security and the price at which the broker-dealer sells the same security to a market maker. This may or may not be considered a commission.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


1. A decrease in a security price made by a dealer because of changing market conditions. For example, a bond trader may take a markdown in long-term bonds held in inventory when market interest rates rise. Compare markup.
2. The difference between the price paid by a dealer to a retail customer and the price at which the dealer can sell the same security to a market maker. Compare markup.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


A markdown is the amount a broker-dealer earns on the sale of a fixed-income security and is the difference between the sales price and what the seller realizes on the sale.

The markdown may or may not appear in the commission column or be stated separately on a confirmation statement.

A markdown is determined, in part, by the demand for the security in the marketplace. A broker-dealer may charge a smaller markdown if the security can be resold at a favorable markup.

The term markdown also refers more generally to a reduced price on assets that a seller wants to unload and will sell at less than the original offering price.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
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