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.