InvestorQ : I have heard some colleagues talking about bips, What is “bips”?
Priyanka Singh made post

I have heard some colleagues talking about bips, What is “bips”?

Answer
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vani Patil answered.
1 year ago


“Bips” or BPS is abbreviation of Basis Point which is unit to measure interest rates and other percentages in finance. As the change in interest rates is very narrow the measurement of the spread or movement is used to denote the percentage change in a financial instrument. One basis point is equal to 1/100th of 1%, or 0.01%, or 0.0001.

Basis Points

Percentage Terms

1

0.01%

5

0.05%

10

0.1%

50

0.5%

100

1%

1000

10%

10000

100%

It is generally used with respect to bonds and loans that quote interest rate in basis points.

So, next time if anyone talks about “bips”, then it means that they are referring to change in interest rate, repo rate, or other percentage change in finance.