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Browse thousands of words and phrases selected by Financial Times editors and suggest new terms for the glossary.

 

Term of the day

basis point BPS

A basis point isĀ one hundredth of one per cent (0.01 per cent), so 100 basis points (bps) is equal to 1 percentage point.

If a bond yield were to increase from 1 per cent to 2 per cent, it is said to risen by 100 basis points (bps) or one percentage point.

A common confusion would be to describe the increase above as a 1 per cent rise, rather than a one percentage point rise. Using basis points (bps), or "bips" as they are known colloquially, avoids any ambiguity.

Bond spreads, the difference...