Portfolio Risk & Return

Basis Point

One hundredth of a percentage point: 0.01%. One hundred basis points make one percentage point, so a 300 basis point (or +300bps) rise in interest rates means rates went up by 3 percentage points — from 2% to 5%, say. The unit exists because “a rise of 0.25%” is ambiguous (a quarter of a percentage point, or a quarter of one percent of the rate?), and basis points remove the doubt. It is the standard language for interest rates, bond yields and fees.

Educational information, not investment advice. See it applied across the screener →