A basis point equals what percentage point?

A basis point equals what percentage point?

• A. 0.01 percentage point
• B. 0.10 percentage point
• C. 1.0 percentage point
• D. 0.001 percentage point

Answer: (A)

A basis point is a unit used to describe small changes in rates. One basis point equals one hundredth of a percentage point, i.e., 0.01 percentage point. So a move from 2.00% to 2.01% is a 1 basis point change. By that standard, 0.01 percentage point is the correct match. For reference, 0.10 percentage point is 10 basis points, 1.0 percentage point is 100 basis points, and 0.001 percentage point is 0.1 basis point.

A basis point is a unit used to describe small changes in rates. One basis point equals one hundredth of a percentage point, i.e., 0.01 percentage point. So a move from 2.00% to 2.01% is a 1 basis point change. By that standard, 0.01 percentage point is the correct match. For reference, 0.10 percentage point is 10 basis points, 1.0 percentage point is 100 basis points, and 0.001 percentage point is 0.1 basis point.