markdown

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noun mark·down \ ˈmärk-ˌdau̇n \
Updated on: 26 Jul 2017

Definition of markdown

1 :a lowering of price
2 :the amount by which an original selling price is reduced

Recent Examples of markdown from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'markdown.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of markdown

1880


mark down

verb

Definition of mark down

transitive verb
:to put a lower price on

Examples of mark down in a Sentence

  1. marked down all seasonal goods immediately after the holidays

First Known Use of mark down

1859


Financial Definition of MARKDOWN

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What It Is

Markdown refers to the negative spread between the price a broker charges a client for a security and the highest price at which that security is sold between brokers. It is the opposite of markup.

How It Works

If a broker wishes to increase his sales volume in a security or set of securities, he may choose to sell them at markdown prices. In other words, if a broker sells a security to a client at a lower price than the highest bid (selling) price in the securities market among brokers, the price is a markdown price.

To illustrate, suppose a broker sells shares of XYZ stock to his clients at $20 per share. He originally purchased the shares in the broker market at $40 per share. Therefore, the markdown on the shares he sells is -$20 ($20-$40).

Markdown should not be confused with markup, which is the positive spread between the lowest bid price in the brokers market and the higher price a broker charges to clients.

Why It Matters

The motivation for a broker to sell securities at markdown prices is to kindle trading activity among clients in the hopes that the multiple commissions on a higher sales volume will offset money lost in the negative spread.


MARKDOWN Defined for English Language Learners

markdown

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noun

Definition of markdown for English Language Learners

  • : a reduction in price


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