DEFINITION of 'Buy'

"Buy" can be a term used in a number of different situations, such as the following:

1. To acquire possession and ownership of a good or service in exchange for payment, either in the form of money or the equivalent value.

2. A buy rating is an investment analyst’s recommendation to buy a security, and implies the security is undervalued.

3. A buy order is an instruction to a broker to buy a security. There are six types of security order.

BREAKING DOWN 'Buy'

A buy rating, also known as a strong buy, is an analyst’s recommendation to buy a security, on a scale of “buy, outperform, hold, underperform, sell."

As brokers use different stock rating scales, investors should study them, to understand what the recommendations really mean. For example, “outperform” can mean “moderate buy," “accumulate," “overweight," and “add." When equity and bond analysts change their rating on a security, it will be “upgraded” if there is a positive change, or “downgraded” if there is a negative change.

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