Markup

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Markup

1. The additional price one pays when one buys a security from a broker-dealer. That is, when one buys a security, one pays the broker-dealer an extra percentage or a flat fee as commission. This markup forms the bulk of the broker-dealer's income.

2. See: Spread.

3. The extra amount a retailer charges a customer for a good over and above what it paid the wholesaler. For example, if one pays Wal-Mart $20 for a toaster, and Wal-Mart bought it from the manufacturer for $15, the markup is $5.

markup

1. An upward revaluation of a security by a dealer because of a rise in the security's market price. For example, a dealer may decide that a markup on a security issue held in inventory is appropriate because of a rising stock market. Compare markdown.
2. See spread.
3. The difference between the price charged by a dealer to a retail customer and the prevailing price at which the same security is being offered by market makers. Compare markdown.

Markup.

When you buy securities from a broker-dealer or market maker, you pay a markup. The markup is either a percentage of the selling price or a flat fee, over and above the amount it cost the broker-dealer to purchase the security.

The amount of this markup, or spread, is the broker-dealer's profit and depends in part on the demand for that security or others like it.

For example, if investors are buying up certain types of bonds, a broker-dealer may increase the markup for bonds in that category.

You might say that the broker-dealer acquires the security at wholesale price and sells it to you at retail price. The difference is the markup.

If the markup doesn't appear on the confirmation statement, you can ask the broker-dealer about the markup amount. Or you can compare the prices that different broker-dealers quote for the same security or the price being quoted for the security on the Internet. The differences in price generally reflect the differences in markups.

References in periodicals archive ?
So we must review that method before discussing how to use my formula for CVP analysis based on markup pricing.
In it, consumers' reactions are compared to being taken advantage of in a sales transaction to how car buyers feel when they're victims of a rate markup.
Other sectors with high markups are the manufacture of basic metals (SIC 27) whose markup takes a value of 2.
Still, advisers should be aware of the costs associated with fixed-income portfolios: the expenses associated with purchasing bonds from a broker-dealer, most notably potentially excessive markups and markdowns which are covered elsewhere in this article.
The writer has heard owners expressing satisfaction at paying a couple of pennies per gallon above the rack price, not realizing that they were paying an extra markup over and above the markup already incorporated into the rack price.
The decision grew out of a lawsuit by a gasoline dealer against his supplier, which had sought to limit prices by requiring the dealer to rebate to the supplier any excess over the allowed markup of 3.
Hospitals that are part of systems and large hospitals tend to have higher markups on charges than independent and small hospitals.
It underscores that high prices are directly linked to industry profits and the increased corporatization of the healthcare industry, and correlates hospital markups to other healthcare industry pricing practices, especially by the pharmaceutical giants.
Cohen's study shows that Honda has subjected both its African American and Hispanic customers to systemic discrimination through uncontrolled dealer discretion in setting markups, a differential markup structure and discriminatory tier bumping.
Brava's user interface is clean and simple and its features include a full set of viewing and markup tools, the ability to burn-in markups and hide areas of the drawing or document (redaction or block-out), scalable printing with watermarks and banners and geometry-based measurements.
Markups can be burned-in to CSF files, and a new block-out function (redaction) allows users to hide specific file content from view and text searching.