Basis point

• A measure of a bond's Yield, equal to 1/100th of 1% of yield. A bond whose yield increases from 5.0% to 5.5% is said to increase by 50 basis points.

• In the bond market, the smallest measure used for quoting yields is a basis point. Each percentage point of yield in bonds equals 100 basis points. Basis points also are used for interest rates. An interest rate of 5% is 50 basis points greater than an interest rate of 4.5%.

• 1/100th of 1%.

• Is the value of an 01 or basis point for credit instruments. Here, it refers to one-hundred of a full percentage point in yield. Sometimes, it refers to a basis point in price. It can also refer to a basis point difference in a basis time series.

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