WHAT IS A BASIS POINT?
Welcome to professrsavings.com, we teach finance basics. Today we will teach you about basis point.
Hi I’m Rayfil Wong. We hope these investment concepts will help you be a better investor.
The basis point, aka BP in the finance street cred world is simply common unit of measure for interest rates.
A basis point is equal to 1/100 of 1% or 0.01%.
Keeping it simple 100 basis points equal 1%.
Bonds and loans often are quoted in basis point terms.
For example, the interest rate on a 6% bond is 50 basis points higher than the interest rate on a 5.5% bond.
Traders use basis points to more accurately describe the movement of a bond in percentage more accurately.
More simple that you think. Remember to go through all the lessons so that you can piece together all the concepts of finance basics.
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