Basis point (bps)

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The Hindu Business Line  Sep 5  Comment 
  Bank of Baroda, on Wednesday, said it will raise its marginal cost of funds-based lending rate (MCLR) across all tenors by 5 basis points with effec
The Hindu Business Line  Sep 3  Comment 
Our Bureau The weighted average lending rates (WALRs) of scheduled commercial banks on outstanding rupee loans for sectors such as housing, large ind
The Economic Times  Aug 19  Comment 
India’s back series economic growth numbers, as estimated by a committee of the National Statistical Commission (NSC), have stirred a political debate.
The Hindu Business Line  Aug 14  Comment 
State-owned IDBI Bank today said it has increased the marginal cost of funds based lending rate (MCLR) by up to 0.10 per cent for various tenors. Th
The Economic Times  Aug 7  Comment 
The revised rate of interest on new home loans for women applicants/co-applicants will now start at 8.7 per cent for loans up-to Rs 35 lakh.
The Economic Times  Jul 10  Comment 
The report further said over the past few years, non-banks have benefited from benign interest rates stemming from excessive liquidity, which turned into a deluge after demonetisation.
The Hindu Business Line  Jul 2  Comment 
 Taimur Baig oversees global research at DBS Bank as Chief Economist and Managing Director. He tracks the G-3 and G-8 and their economies closely whil




 

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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