basis point

noun

Definition of basis point

: one hundredth of one percent (as in the yield of an investment)

Examples of basis point in a Sentence

Recent Examples on the Web

The company charges from $1 to $4 per trade, and takes a small percentage (50 basis points) of the sale. — Casey Newton, The Verge, "Coinbase thrived when cryptocurrencies crashed. Can it take the blockchain back to the mainstream?," 27 Sep. 2018 In November, for example, the difference between offers to buy and sell an Eventshares tax-reform ETF -- which launched without a lead trader -- spiked to 116 basis points, Bloomberg closing-price data show. — Rachel Evans, Bloomberg.com, "There’s a Shortage of Expert ETF Traders Who Make the Market Tick," 23 May 2018 The Turkish lira was one of the few emerging-market currencies to strengthen Thursday, after Turkey’s central bank unexpectedly raised interest rates by 125 basis points. — Ira Iosebashvili, WSJ, "Brazil Selloff Feeds Global Emerging-Markets Retreat," 7 June 2018 Yields on government Eurobonds maturing the same year were up two basis points at 5.05 percent. — Yuliya Fedorinova, Bloomberg.com, "U.K. Lawmakers Urge Curbs on Russian State Debt, Share Sales," 21 May 2018 Yields on benchmark 2026 government bonds climbed eight basis points to 8.65 percent. — Colleen Goko, Bloomberg.com, "South African Assets Tumble as Ramaphosa's Growth Pledge Palls," 5 June 2018 After stripping out food and energy, consumer prices are poised to rise by three basis points in response, Goldman Sachs Group Inc. said in a research note Monday. — Andrew Mayeda, Bloomberg.com, "Why Trump's Trade War Isn't Worrying Most Economists, Yet," 5 June 2018 The Federal Reserve raised the federal funds rate by 25 basis points in March, to 1.75%, while signaling two more rate hikes on the way for the year—and perhaps a third, to help cool a hot economy and bring rates closer to historical norms. — Chris Taylor, Fortune, "Why Your Summer House Could Be a Shaky Investment," 29 May 2018 Turkey’s central bank responded to a sharp drop in the lira Wednesday by delivering a 300 basis point rate increase. — Ira Iosebashvili, WSJ, "Dollar Slides Lower in Aftermath of Fed Minutes," 24 May 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'basis point.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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Last Updated

19 Nov 2018

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The first known use of basis point was in 1962

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basis point

noun

Financial Definition of basis point

What It Is

A basis point is one hundredth of one percent.

How It Works

There are one hundred basis points in one percent.

Let's say Bank XYZ pays 2.54% interest on its savings accounts. A month later, it raises the rate to 2.75%. We would say that rate increased by 21 basis points.

Why It Matters

Basis points are in anything that is expressed as a percentage: interest rates, rates of return, bond coupons, rates of change and much more. Because tiny changes can have big effects, it is no surprise that the markets are concerned about hundredths of a percent.

Source: Investing Answers