Basis point

One basis point is 0.01 percentage point, equivalent to 0.0001 as a decimal. One hundred basis points equal one percentage point. Basis points avoid ambiguity between a change in a quoted rate and a percentage change relative to that rate. They are often used for loan margins, yield movements and fees. Convert them to the correct decimal before multiplying by a principal and time fraction. A movement of 50 basis points is not a 50% proportional change in the original rate.