Basis Points

The speaker covers the basics of a basis point.  A basis point is the smallest unit of measure to account for changes in rates of a financial instrument.  1 basis point equals 1/100th of a percent.  If the Fed lowers the rates from 3 to 2.5%, it can be said t

What is a Basis Point?

The term Basis Point (bp) was created to account for fractional changes in bond yields. Since large institutional bond traders can make or lose hundreds of thousands of dollars on fractional moves in interest rates, they divide each percentage point by 100 to gain a more granular level of analysis.