Glossary

A basis point (BPS) is a unit of measurement in finance used to express changes in interest rates, bond yields, or other percentages.

One basis point is equal to 0.01% or 1/100th of a percent. Basis points are commonly used in financial markets because they provide a more precise way to describe small changes in percentages without using decimals. 🔍

For example, if a central bank raises interest rates by 25 basis points, it means the interest rate has increased by 0.25%.

Fun fact: The term "basis point" originates from the practice of converting percentages into points to simplify calculations. It has nothing to do with a geographical or mathematical base; rather, it is derived from the word "base," which refers to the base of a number system. 🤓