What is a Basis Point: **A unit of measurement called a basis point is utilised in finance to express a financial instrument’s rate or value change as a percentage.** Basis points, also referred to as “**bps**” or “**bips**.”

The term “basis points” is used to describe how to measure changes in percentage rates.

Let’s use examples to clarify this term.

- If the central bank reduces interest rates by 0.25%, we frequently refer to it as a 25 basis point reduction.

- If interest rates were raised from 2% to 3%, we would say there was a 100 basis point increase.

**One basis point**is equal to**0.01%**(1/100th of a percent), or equal to**0.0001**when expressed in decimal form.

## Basis Point Calculator

When computing basis points, remember that one basis point equals 0.01%, or 0.0001. In order to convert basis points to percentages, multiply the result by 100. Divide by 100 to convert percentages to basis points.

## 50 Basis Points

How much is 50 basis points? 50 basis points are equivalent to 0.5 percent as 1 basis point is equal to 0.01%. 50 basis points hence represent 0.5 %.

## What Tools Does BPS Apply To?

Basis points are mostly used in relation to yields and interest rates. however, they might also be applicable to a decrease in an asset’s worth. The following are typical examples: