bp
basis point
Dimensionlessexact by definition
A basis point is one hundredth of a percent, exactly 1e-4. It is finance's unit for interest rates, yields and fees, where a quarter point rate move is 25 basis points, and it also turns up in engineering tolerance and drift specifications. The factor is exact by definition.
| 1 bp | 0.0001 — |
Where the unit came from
The unit exists to remove an ambiguity rather than to shorten a number. A rate that moves from 4 percent to 5 percent has risen by one percentage point and by 25 percent of its former value; saying it rose 100 basis points can only mean the first.
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