Investor Glossary-downgradeInvestor Glossary-downgradeInvestor Glossary-downgradeInvestor Glossary-downgradeInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Downgrade

WordPress
The HTML to link to this page
 

A downgrade is a reduction in the rating awarded a debt or equity security. A major credit agency downgrades the debt of a company or governmental entity when its financial situation deteriorates. The downgrade tells investors they are less certain to receive the interest payments and return of capital they are due. The downgrade usually has the effect of reducing the security's price and raising the issuer's cost of capital. A downgrade in the rating of a stock by a security analyst (e.g., buy, hold, sell) has more varied effects. If the downgrade is issued by a leading analyst who is known for forecasting moves in the stock's price, the downgrade can cause a major sell-off in the equity. If the analyst has a less stellar reputation, the downgrade may have little impact. Another key factor that determines the effect of a downgrade is whether the underlying analysis introduces important new information to the market -- or whether the reasons offered for the downgrade simply repeat management's own negative assessment of the company's prospects.



Rate this downgrade definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: required rate of return, ex-dividend, Zero Cost Collar, debt service coverage, quality assurance, class C shares, LIBOR, command economy, stock market close, per diem, VIX, reverse mortgage, 401a, current ratio, implied volatility, labor relations, stock split, deferred tax, APR, cancelled check, 1035 exchange, phantom income, deferred revenue, liquidity ratio, minority interest, in escrow, real GDP, irrevocable trust, average price per share, covered put, inflation, open position, 1031 exchange, Key Rate Duration, margin rate, EBITDA, risk management, retained earnings, 144a, wholly-owned subsidiary, FTSE, dividends payable, limit order, ex-dividend date, balance sheet, FICO score, annual return, option premium, diluted share


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2015 Investor Glossary - All rights reserved - Terms of Use