Basis Point (BPS)

RECENT NEWS
Clusterstock  Apr 11  Comment 
Treasury yields are plunging as traders rush for safety amid renewed uncertainty surrounding geopolitical tensions in the Middle East and on the Korean peninsula. Aggressive buying has yields down as much as 7 basis points in the belly of the...
Clusterstock  Apr 7  Comment 
US Treasury yields are tumbling after the jobs report came in well below expectations. The Bureau of Labor Statistics says the US economy added 98,000 jobs in March, missing the 180,000 that was expected by the Bloomberg consensus.  Moderate...
The Hindu Business Line  Apr 4  Comment 
Indian Overseas Bank has cut its base rate by 20 bps effective April 1. The new base rate is 9.50 per cent. The existing loans linked to the base rate will be revised with effect from April 1, the ba...
The Hindu Business Line  Apr 3  Comment 
“The outlook for 2017-18 is positive and we should be able to encash all the growth opportunities.”
The Economic Times  Mar 17  Comment 
Noted industrialist Adi Godrej also said that once GST was in place, it would give a tremendous boost to GDP.
The Hindu Business Line  Feb 6  Comment 
IDBI Bank today said it has reduced its marginal cost of funds based lending rate (MCLR) by 30-35 basis points across various tenors, effective February 1. For overnight tenor, the bank has reduced i...
Motley Fool  Feb 4  Comment 
Mortgage rates were slightly higher on Friday. Meanwhile, the U.S. economy added 227,000 jobs in the month of January, beating expectations and providing evidence that the "Trump effect" on animal spirits has had an early economic impact.
The Times of India  Feb 1  Comment 
The proposed merger between Vodafone and Idea can fetch the combined entity upto 350 bps in cost savings, even though the move is unlikely to lead to better pricing power for operators in the short-term, says a report.
The Hindu Business Line  Jan 13  Comment 
Axis Bank on Friday announced a 65-70 basis points cut in its marginal cost of fund-based lending rate (MCLR) across tenors with effect from January 18. Following the cut, the private sector bank'...




 

For the article on the company with ticker BPS, see BlackRock Pennsylvania Strategic Municipal Trust (BPS).

A basis point (abbreviated as 'bps' and sometimes pronounced "bips") is a unit that is equal to 1/100th of 1%, and is often used instead of percentages when discussing interest rates, rates of return, and other percentage-based performance metrics that can occur as fractions of a percent. 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 practice in the financial industry to use basis points to denote a rate change in a financial instrument, or the difference (spread) between two interest rates, including the yields of fixed-income securities.

1% change = 100 basis points, and 0.01% = 1 basis point.

So, a bond whose yield increases from 5% to 5.5% is said to increase by 50 basis points; or interest rates that have risen 1% are said to have increased by 100 basis points. The marginal effect of each basis point change in the value of long term bonds can be very significant for this reason changes are tracked by basis points or 1/100th of 1%

Since certain loans and bonds may commonly be quoted in relation to some index or underlying security, they will often be quoted as a spread over (or under) the index. For example, a loan that bears interest of 0.50% per annum above the London Interbank Offered Rate (LIBOR) is said to be 50 basis points over LIBOR, which is commonly expressed as "L+50bps" or simply "L+50"

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