Basis point
Basis Point (bps)
MacroeconomicsOne hundredth of a percentage point. Interest rates, yields, spreads, and expense ratios are quoted in basis points to avoid ambiguity.
Formula
100 bps = 1.00%
Why it matters
Saying a rate rose 'by 1%' is ambiguous; saying it rose 100 bps is not. Small basis-point differences compound into large money over time and size.
Indian example
Related terms
Learn the concept
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