upgrading


Upgrading

Raising the quality rating of a security because of new optimism about the prospects of a firm due to tangible or intangible factors. This can increase investor confidence and push up the price of the security.

Upgrade

1. An improvement to an existing product. Some companies, especially technology companies, offer upgrades to customers for free or at a discount.

2. An improvement to the quality of securities in a portfolio. For example, one may sell a stock with a given risk and return and buy another stock with a higher return at the same level of risk. Alternatively, a security may upgrade by itself; for example, its issuer may announce higher than expected earnings, and, therefore, a higher dividend.

3. An increase in a bond rating. For example, if a bond goes from a junk rating to an investment-grade rating, the bond is said to be upgraded. This usually occurs when the issuer reduces its exposure to one or more risks.

upgrading

1. An increase in the quality rating of a security issue. An upgrading may occur for a variety of reasons, including an improved outlook for a firm's products, increased profitability, or a reduction in the amount of debt the firm has outstanding. As circumstances change, upgrading or downgrading of a security takes place once the issue has been initially rated and sold. An upgrading generally can be expected to have a positive influence on the price of the security. Compare downgrading.2. An increase in the quality of securities held in a portfolio.