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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.
References in periodicals archive ?
According to the GMDC study, back-to-school has the potential to deliver 9.8% of GM seasonal sales and a 20% gross profit after shrinkage and markdowns. The markdown range is typically 8% to 10%.
On the other hand, if the markdown were understated, the reverse would occur.
R excludes the markdowns from the denominator of the cost complement.
The E&Y research also showed that pre-Christmas discounting was deeper than last year whilst post Christ-mas markdowns were shallower.
"During the fall [1999] season, the company began the implementation of an enhanced markdown strategy that accelerated markdowns and shortens merchandise cycles," Bull wrote in a March 21, 2000 release.
and restructuring activities, plus a $75 million pretax charge for markdowns on noncompatible Revco merchandise.
Through the use of sensitivity analysis, the value of obtaining additional resources, such as ad budget, inventory or price markdowns, can be easily estimated.
For example, the spreadsheet can show planned purchase dollars, planned sales dollars, initial product setup, inventory dollars, planned carryover and projected markdowns. A seasonal event planner can serve as a business engine and working document in which ideas, dates and guidelines are included.
"Even after factoring in the nature of the market for these types of instruments, the markdowns charged were simply unacceptable, as was Merrill Lynch's failure to conduct post-trade fair pricing or best execution reviews for customer transactions executed on the Credit Desk." FINRA says it also concluded that Merrill Lynch "did not have an adequate supervisory system in place to detect whether the firm's credit desk executed a retail customer transaction at a price consistent with the prevailing market price of that security." The regulatory group adds that the firm did not complete reviews of the trades for best execution and fair pricing.
"Markdowns in the quarter were mostly in our consumables category, and this was driven by two main factors," she said.
As an alternative, the IRS stated that the retail-inventory method could achieve the same result by permitting taxpayers to reduce the numerator (the cost of beginning inventory and the cost of purchases) of the cost-to-retail ratio for all non-sales- based allowances, discounts, or price rebates, including markdown allowances, but requiring a reduction of the denominator (the retail selling price of beginning inventory plus the retail selling price of purchases) of the cost-to-retail ratio for all permanent markdowns related to mark-down allowances.