When a broker-dealer sells you securities out of its inventory, the broker-dealer acts as a principal in the transaction (that is, selling to you directly the securities it holds). When acting in a principal capacity the broker-dealer generally will be compensated by selling the security to you at a price that is higher than the market price (the difference is called a markup), or by buying the security from you at a price that is lower than the market price (the difference is called a markdown).
Artificial Intelligence (AI) and Investment Fraud
Read our Investor Alert to learn how bad actors are using AI to lure victims into scams and what you can do to keep your money safe from these frauds.
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What Are Bonds?
A bond is a debt security, like an IOU. Learn about the benefits and risks of investing in bonds or bond funds.