Basis Point

A Basis Point (BP) is a tiny unit used to express interest rate changes. It’s equal to 1/100th of 1%, so 1 bp = 0.01%. Basis points are commonly used to express changes in interest rates, bond yields, and other percentages in financial contexts to avoid ambiguity. 

For example, if an interest rate increases from 3.00% to 3.25%, it has risen by 25 basis points. This precise measure helps lenders, investors, and analysts accurately communicate and understand small changes in rates and yields.