A basis point, or bp, denotes a change in hundredths of a percent.
- 1 basis point = 0.01%
- 100 basis points = 1%
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.
Related Fool Articles
Recent Mentions on Fool.com
- 3 Up-and-Coming Restaurant Stocks to Watch
- Lululemon Athletica Bounces Back But Paints a Gloomy Picture for 2015
- Is the Housing Sector Doomed Once Interest Rates Start Rising?
- Kraft Heinz: Why Warren Buffett Loves Doing Deals With 3G Capital
- 5 Key Takeaways from ExOne Co.'s Earnings Call
- Allied Capital: 5 Years After its Downfall