What are Basis Points?
What is a Basis Point | Definition
Often abbreviated as bp.
(1) A measurement of fluctuation in the current yield equal to l/l00 of one percent (on) bonds or bills. Basis points are often used to report fund fees. For example, a fee that increased from 1.50% to 1.55% would have risen 5 basis points.
(2) In the bond market, the smallest measure used for quoting yields. Each percentage point of yield in bonds equals 100 basis points. Basis points are also used for interest rates. For example, an interest rate of 5% is 50 basis points greater than an interest rate of 4.5%.
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