Basis point
Encyclopedia : B : BA : BAS : Basis point
A basis point (bp or ‱) is 0.01% and is often used in the context of interest rates.
100‱ is 1 percentage point, and 10,000 basis points is 100.00%.
When comparing two percentage values using basis points, a simple arithmetic difference is taken. For instance, the difference between 5.01% and 5.00% will be 1 basis point.
Basis points are used among other things to measure changes in the yield of a bond or moves in the money market. The smallest possible change in the exchange rate between two currencies, which is often called a bip in financial jargon, is usually one basis point.
The type of interest rate has to be specified (e.g., bond yield, zero-coupon yield, Act/360 money market rate, Act/365 money market rate, etc).
Related units
- Percentage (%) 1 part in 100.
- Percentage point.
- Per mille (‰) 1 part in 1,000.
- Parts per million (ppm).
- Parts per billion (ppb).
- Parts per trillion (ppt).
- Baker percentage
From Wikipedia, the Free Encyclopedia. Original article here. Support Wikipedia by contributing or donating.
All text is available under the terms of the GNU Free Documentation License See Wikipedia Copyrights for details.