Basis point (bps)

RECENT NEWS
The Economic Times  Aug 10  Comment 
However, in the current fiscal, the tax-GDP ratio is expected to see no increase over that of 2016-17 and remain at 11.3 per cent, the report noted.
The Hindu Business Line  Aug 9  Comment 
Syndicate Bank has pared its marginal cost of funds based lending rate (MCLR) by 5-10 basis points in certain maturity buckets. MCLR for six months and one year will be 8.3 per cent (8.35 per cent ...
The Hindu Business Line  Aug 2  Comment 
The Finance Ministry on Wednesday welcomed the move by the Monetary Policy Committee to lower the repo rate by 25 basis points. “We welcome the 25 basis points cut in the repo rate as an important ...
The Economic Times  Jul 31  Comment 
Some market players expect 50-75 basis points cumulative rate cuts this financial year.
The Hindu Business Line  Jun 30  Comment 
PPF will now yield 7.8%, KVP 7.5%
The Economic Times  Jun 14  Comment 
The Fed first increased rates in December, 2015, after more than a decade.
The Hindu Business Line  Jun 11  Comment 
The June monetary policy meeting came against the backdrop of a sea change in the perception of future inflation trajectory.There were widespread expectations that the central bank would acknowledge t...
Clusterstock  Jun 6  Comment 
Treasurys are rallying on Tuesday morning, causing longer dated yields to press to their lowest levels since the days following Donald Trump's election win. The complex held early gains and climbed to its best levels of the day after a...
Clusterstock  Jun 2  Comment 
Treasurys are rallying after the disappointing May jobs report. The US economy added 138,000 nonfarm jobs, missing the 182,000 that economists were anticipating. Additionally, the unemployment rate fell to a post-recession low of 4.3%. The...




 

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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