The National Directory of Certified Public Accountants

Ask A CPA - Investments & Financial Planning

How Is A Basis Point Calculated ?

Basis point in the bond market is the smallest measure used for quoting yields. Each percentage point of yield in bonds equals 100 basis points. Basis points also are used for interest rates. An interest rate of 6% is 50 basis points higher than an interest rate of 5.5%. In the bond market, the smallest measure used for quoting yields is a basis point. Each percentage point of yield in bonds equals 100 basis points. Basis points also are used for interest rates. An interest rate of 5% is 50 basis points higher than an interest rate of 4.5%. In the bond market, the smallest measure used for quoting yields is a basis point. Each percentage point of yield in bonds equals 100 basis points. Basis points also are used for interest rates. An interest rate of 5% is 50 basis points higher than an interest rate of 4.5%.

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