What is a basis point (BP)?

Basis points, also known as BPS or BIPS, are numerical units used to identify changes in interest rates, percentages or financial instruments, meaning money-holding assets like stocks or bonds. One basis point equals 0.01%, which is 1/100th of a percent or 0.0001.

How do you calculate BPS?

Divide the sale value by 100 to find 100 basis points. We sold our stock option for $150000, so 100 bps is $1,500. Divide this new number by 100 again to get 1 basis point. For our sale, 1 bps is $15. Multiply the value for 1 basis point by how many basis points you earn from commission. We earn a 30 bps commission, so we earnt $450 on our sale.

How do you calculate basis points (bps)?

Basis Points (bps) = Percentage (%) × 100 By expressing the percentage in the form of basis points, the incremental changes, such as the spread on bond yields, are easier to discuss, and the probability of misinterpretation is reduced.