Desde Investopedia

TERM OF THE DAY

Basis Point Basis point (BPS) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 1/100th of 1%, or 0.01% (0.0001), and is used to denote the percentage change in a financial instrument. The relationship between percentage changes and basis points can be summarized as follows: 1% change = 100 basis points, and 0.01% = 1 basis point.

Breaking it Down: The basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of a fixed-income security. It is common for bonds and loans to be... Read More