basis point

One one-hundredth of a percent, used in measuring yield differences among bonds.

A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of a fixed-income security.

Investopedia Says:
The relationship between percentage changes and basis points can be summarized as follows: 1% change = 100 basis points, and 0.01% = 1 basis point.

So, a bond whose yield increases from 5% to 5.5% is said to increase by 50 basis points; or interest rates that have risen 1% are said to have increased by 100 basis points.

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Smallest measure used in quoting yields on bills, notes, and bonds. One basis point is .01%, or one one-hundredth of a percent of yield. Thus, 100 basis points equal 1%. A bond's yield that increased from 8.00% to 8.50% would be said to have risen 50 basis points.

One 100th of 1%.
Example: Mortgage loan interest rates are 7.75% this week. They were 7.25% last week. The increase was 50 basis points (775 minus 725 equals 50).

A unit at the level to which a particular figure is routinely expressed, regardless of the position of the decimal point. Thus, if interest rates are normally expressed (as a percentage) to two decimal places, then a rise from 5.41 to 5.61 would be termed a rise of 20 basis points (and had it risen by 19, one should say to 5.60 rather than 5.6). That rise of 20 basis points could also be described as a rise of 0.2 percentage points, this latter expression being independent of the number of decimal places cited. (A rise of 0.2 from 5.41 is a rise of 0.2 × 100%/5.41 = 3.7% of the interest rate itself.)

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