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I am considering installing an HDMI switch because my Denon 987 has only 2 HDMI inputs and I have 3 HDMI components. is it possible for a switch to degrade the HDMI signal?
 

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There shouldn't be any degradation of the signal, however you can run into an issue with the amount of keys the source device can use if you are putting the switch before the receiver then hdmi into the receiver and then to the display.
 

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If it is a good quality hdmi switch, you won't get any degradation since hdmi is all digital.
We use an Octava HDMI switch, it has 4 inputs and also has toslink optical switching and HDMI to optical audio de-embedding. This allows us to watch News video from cable box via hdmi and run a secondary audio source to play the audio thru our 10 year old AV amp which does not have HDMI.
 
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