A Basis Point (abbreviated as bps, pronounced "bips") is a standardized unit of measure used in financial trading, bond pricing, and interest rate discussions to eliminate ambiguity when discussing percentage changes.
Because "percent change" and "percentage point change" are frequently confused in casual conversation, financial professionals use basis points: - 1 Basis Point (1 bps) = 0.01% = 0.0001 - 10 Basis Points (10 bps) = 0.10% - 25 Basis Points (25 bps) = 0.25% (a standard Federal Reserve rate adjustment) - 100 Basis Points (100 bps) = 1.00%