Investor Glossary-downgradeInvestor Glossary-downgradeInvestor Glossary-downgradeInvestor Glossary-downgradeInsightful stock market charts - Click here
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


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

Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use