| A Basis Point is 100th of a percent (% is the symbol) or 10,000th of the whole. 100 basis points are equal to 1%. The term is often used in advanced finance when discussing interest rates. Example "The Fed might raise interest rates 50 basis points." This means 50/10,000 = 5/1000 = .005 and multiply by 100 to convert to a percent = .005 = .5% or 1/2 a percent. Percentages are fractions of the number of items divided by the total number of items. Test scores are a percentage of the number of correct answers divided by the total number of questions. Sales tax are percentages of the price of a product. Returns on an investment are the change of price. Basis points just helps with very small changes 50% is the same as 1/2 or 4/8 or 50/100 or 0.5 To convert a Percent to basis points you multiply the value by 100. So 1% is equal to 100 basis points. 50 basis points are the same as 0.5% which is the same as 1/200. So to convert basis points to Percent you divide it by 100. |