What is a basis point in finance?

Basis points is a unit of measure used in finance to express percentage change. If, for example, the Fed hiked interest rates from 4% to 4.5%, you could say borrowing rates rose 0.5 percentage points or 50 basis points. Basis points are commonly used in reference to interest rates and bond yields.

What is the difference between percentage points and basis points?

A Basis Point is one hundredth of a Percentage Point. 0.01 Percentage Points = 1 Basis Point. 1 Percentage Point = 100 Basis Points. Example: The difference between 8.10% and 8.15% is 5 Basis Points.

What is 100 basis points?

A basis point is one hundredth of a percent, so 100 basis points is equivalent to 1%. “Basis point” is sometimes abbreviated to “bp” and “basis points” to “bps.” When are basis points used? Basis points are often used to measure a difference in percentages.

What is a basis point in decimal form?

One basis point is equivalent to 0.01% (1/100th of a percent) or 0.0001 in decimal form. Likewise, a fractional basis point such as 1.5 basis points is equivalent to 0.015% or 0.00015 in decimal form. In most cases, basis points refer to changes in interest rates and bond yields.