Basis point (bps)

RECENT NEWS
The Hindu Business Line  Apr 23  Comment 
City-based UCO Bank has reduced its base rate by 25 basis points (0.25 per cent) to 9.95 per cent with effect from May 1, this year. Interest rate on deposits across all tenors has also b...
The Economic Times  Apr 15  Comment 
"Under Steel Strips Wheels' agreement with Escorts, we are expecting that the turnover will jump by 80% in the next one year."
The Hindu Business Line  Apr 1  Comment 
To enhance employability and augment talent supply for the BPS (Business Process Services) industry, IT services company – Tata Consultancy Services is collaborating with colleges. Collab...
The Economic Times  Mar 31  Comment 
The Noida-based firm said its EBIT (operating earnings) is also expected to be negatively affected by 80 basis points.
The Economic Times  Mar 17  Comment 
As the economy picks up, as investment cycle picks up and as GST comes in, the logistics space will have an important role to play, believes Agarwal.
The Economic Times  Mar 8  Comment 
"A formalised monetary policy framework is a good idea and I don’t think of it as RBI-vsfinance ministry tussle," Sanjeev Sanyal said.
The Hindu Business Line  Mar 8  Comment 
State Bank of Travancore (SBT) has announced a 10 basis-point cut in the base rate to 10.15 per cent effective from March 16. SBT is the first off the block to act in the post-Budget...
The Hindu Business Line  Mar 4  Comment 
When competitiveness is the key for survival in the global market, the
Forbes  Feb 8  Comment 
Images of BP's 500-ton system to stop deepwater oil spills




 

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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