Basis Point
Definition
One one-hundredth of a percentage point (0.01%). Used primarily in fixed income and monetary policy.
Explanation
Basis points (bps, pronounced 'bips') eliminate ambiguity in discussing interest rate changes. Saying 'rates rose 0.25%' is ambiguous — does that mean from 4.00% to 4.25%, or a 0.25% increase to 4.01%? Saying 'rates rose 25 basis points' is unambiguous. Common conversions: 100 bps = 1%, 50 bps = 0.50%, 1 bp = 0.01%. The Federal Reserve typically adjusts rates in 25 bps increments.
How Stoquity Uses This
Stoquity incorporates basis point analysis across its portfolio management platform, providing real-time monitoring and AI-powered insights for every portfolio.