Legal Definitions - security grade

A security grade is a classification system used to determine the financial strength, stability, or risk of a security. This system is used by firms such as Standard and Poor's and Moody's to grade securities.

For example, if a company issues bonds, those bonds will be assigned a security grade based on the company's financial stability and the risk associated with the bonds. A bond with a high security grade is considered less risky and more stable than a bond with a lower security grade.

The security grade is important for investors because it helps them make informed decisions about which securities to invest in. A higher security grade generally means a lower risk of losing money, while a lower security grade means a higher risk of losing money.