How to calculate Basis Point?

A basis point is a unit of measurement for the interest rates as well as percentages. The unit is mostly preferred in the finance background to express the rate of percentage change in a financial instrument.  A basis point is a tool to calculate the change in interest rates and percentage mostly probably in the trading sector.

It is represented by the abbreviations ‘bp’, ‘bps’, or ‘bips’. And, generally, 1 basis point equals 1/100th of 1% in the financial domain.

How to calculate Basis Point?

Answer:

As per the standard conversion of a basis point, 1 percent of percentage change equals 100 basis points. Hence, the standard form of conversion will be,

• 1% percentage change = 100 basis point
• 0.01% percentage change = 1 basis point

Converting percentage into basis point

The standard valuation of percentage and basis point is 1% equals 100 basis points. Hence, we can simply convert the percentage into a basis point by multiplying the percentage by 100.

Percentage to basis point = percentage × 100

Converting the basis points into percentages

The standard value of basis point and percentage as we studied earlier is 100 basis points equals 1% percentage change. Hence, the basis point can be converted into a percentage by dividing the basis points by 100.

Basis point to percentage = basis point/100

Sample Problems

Question 1: What is the percentage denoted by 25 basis points?

Solution:

Since, 1 basis point = 0.01% 

Then, To convert the basis points into percentages we have to divide the basis points by 100.

=> 25/100

=> 0.25%

Therefore, 25 basis points denote 0.25%.

Question 2: What is the percentage denoted by 30 basis points?

Solution:

Since, 1 basis point = 0.01%

Then, To convert the basis points into percentages we have to divide the basis points by 100.

=> 30/100

=> 0.3%

Therefore, 30 basis points denote 0.3%.

Question 3: What is the percentage denoted by 200 basis points?

Solution:

Since, 1 basis point = 0.01%

Then, to convert the basis points into percentages we have to divide the basis points by 100.

=> 200/100

=> 2%

Therefore, 200 basis points denote 2%.

Question 4: How many basis points equal 3% of the percentage?

Solution:

Since, 1% percentage = 100 basis point

Then, to convert the percentage into basis points we have to multiply the percentage by 100.

=> 3 × 100

=> 300

Therefore, 3% percentage denotes 300 basis points.

Question 5: How many basis points equal 5% of the percentage?

Solution:

Since, 1% percentage = 100 basis point

Then, to convert the percentage into basis points we have to multiply the percentage by 100.

=> 5 × 100

=> 500

Therefore, 5% percentage denotes 500 basis points.

Question 6: How many basis points equal 1.5% of the percentage?

Solution:

Since, 1% percentage = 100 basis point

Then, to convert the percentage into basis points we have to multiply the percentage by 100.

=> 1.5 × 100

=> 150

Therefore, 1.5% percentage denotes 150 basis points.