What is a Basis Point?

A basis point (Basis Point) is defined as "0.01%" (0.01%) or "100% of a percentage point" and can be represented by the arithmetic symbol . It is widely used in the calculation of interest rates, exchange rates, stock prices, etc., because these categories involve the calculation of very small percentages. ^[1]

Basis Point (bp)

In financial terms, a measure of the amount of change in interest rates on bonds and notes. One basis point equals 0.01 percentage point, or 0.01%, so 100 basis points equal 1%.

A basis point (Basis Point) is defined as "0.01% (0.01%)" or "100% of a percentage point". It is widely used in the calculation of interest rates, exchange rates, stock prices, etc., because these categories involve the calculation of very small percentages. simply put:

One hundred pips = one hundredth

Ten thousand pips = one hundred percent = one

When comparing percentages, in addition to using percentages, the slight difference between two percentages can also be expressed in pips. For example, the difference between 4.02% and 4.05% is 0.03 percentage points, which means a difference of 3 pips.

In mainland Chinese, it is customary not to add a "person" between numerical values and "ideas" (that is, usually three ideas, not three ideas). Percentage points must be added with a "person" (only 0.03 percentage points can be said).

	percentage	Percentage	base point	Pips	Billion fractions	Terabit rate
percentage		10	100	10 ^ 4	10 ^ 7	10 ^ 10
Percentage	0.1		10	10 ^ 3	10 ^ 6	10 ^ 9
base point	0.01	0.1		10 ^ 2	10 ^ 5	10 ^ 8
Pips	0.1 ^ 4	0.1 ^ 3	0.1 ^ 2		10 ^ 3	10 ^ 6
Billion fractions	0.1 ^ 7	0.1 ^ 6	0.1 ^ 5	0.1 ^ 3		10 ^ 3
Terabit rate	0.1 ^ 10	0l.1 ^ 9	0.1 ^ 8	0.1 ^ 6	0.1 ^ 3

One

Basis The difference between the spot price and the futures contract price of the same commodity. The difference between current and futures prices. Calculation formula:

Cash price-futures price = basis point

Basis points are usually negative, as holdings need to be paid

1. As a place to carry out certain activities: Promote new technologies for cotton production from cotton-producing townships.

2. The fundamentals of the development of things; the basis: to understand the situation through investigation and research is to solve the problem ~.

3. The base point in CAD: The base point is determined according to the actual situation. For example, if you rotate, then the rotation will have a center point, then this center point is the base point.

4, the base point in the network: based on a certain PC or site, the center that radiates to the surrounding or peripheral network is called the base point.

5. Center; focus.

6. Financial concept, reference point, referred to as the basic point (Basis). Concept: The difference between the spot price and the futures contract price of the same commodity. The difference between current and futures prices.

Like percentage points, base points can only avoid the ambiguity between relative and absolute discussions about interest rates by only dealing with absolute changes in interest rate values. For example, if a report says that a 10% interest rate has increased by 1%, this could be a rise from 10% to 10.1% (relative to 1% of 10%) or 10% to 11% (absolute value, 1% plus 10%) . However, if it is reported that the 10% interest rate has risen by "100 basis points", the 10% interest rate has increased significantly by 1% to 11%.

The financial industry usually uses basis points to indicate changes in interest rates on financial instruments, or the difference (spread) between two interest rates (including the rate of return on fixed income securities).

Because certain loans and bonds may often be associated with certain indices or underlying securities, they are often referred to as indices (or below). For example, a loan with an annual interest rate exceeding 0.50% of the London Interbank Offered Rate (LIBOR) is said to be 50 basis points higher than LIBOR, and is usually expressed as "L + 50bps" or simply "L + 50".

The term "basis point" originates from the "basis" of a transaction or the difference between two interest rates. Since the cardinality is usually small, the reference is multiplied by 10,000, so the "full point" motion of the "cardinality" is the basis. Contrary to the gap in the foreign exchange forward market.

Investment fund expense ratios are usually quoted on a base basis. ^[2]