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Basis point

A basis point, or bp, denotes a change in hundredths of a percent.

  • 1 basis point = 0.01%
  • 100 basis points = 1%

Expanded Definition

Basis points are commonly used in banking and credit situations. For example, when the Federal Reserve cuts rates from 2.25% to 2.00%, it's referred to as 25 basis point cut. Or when a company's gross margin goes from 40.02% to 40.08%, it's referred to as a 6 basis point increase.

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