Business and Personal Finance Dictionary

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• MARKUP
  
  When you buy securities over the counter (OTC) from a broker/dealer's inventory, you pay a markup, typically a percentage of the selling price, over and above the amount it cost the broker/dealer to purchase the security. The amount of this markup, or spread, 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. To determine the markup you're paying, and whether it is in line with the 5% guideline set by the National Association of Securities Dealers (NASD), you must either ask the broker/dealer about the markup amount or compare the prices (including the markups) that a number of broker/dealers quote you for the same security. The differences in price generally reflect the differences in markups.
  
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