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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
"Basis point"