[HoundsTooth_BP]

Here's a question: What exactly IS a "basis point" anyway?"

1/100th of a percent. NO, 1/l00th is written 0.01%.

1/4 of 100, when interest goes up 0.25% that is 1/4 of one percent. So, a whole basis point is just one percent or l.00%.

[Woodman]

Soooo, are you trying to tel me that the Fed raised rates today 25%?

In the interest rate markets a whole number is accepted as being 1 percentage point. A basis point is 1/100th of 1 point or 1/100 of 1 percent.

A T-Bill is an instrument that matures in less than 1 year. They are priced at a discount to par (100%). Par value of a T-Bill is $1,000 dollars but are generally traded in lots of $10,000 if you take a one basis point swing on $10,000 it equals $1.00 or $100.00 on 1mio USD.

However to you and I (unless you trade money markets or fixed income) 25 basis points means .25% or 1/4 of a point.

[Woodman]

One entry found for basis point.

Main Entry: basis point
Function: noun
: one hundredth of one percent in the yield of an
investment

or

Main Entry: 1point
Pronunciation: 'point
Function: noun
Etymology: Middle English, partly from Old French,
puncture, small spot, point in time or space, from Latin
punctum, from neuter of punctus, pp. of pungere to prick;
partly from Old French pointe sharp end, from (assumed)
Vulgar Latin puncta, from Latin, feminine of punctus,
past participle ...
15 : a unit of measurement: as a (1) : a unit of counting in the scoring of a game or contest (2) : a unit used in evaluating the strength of a bridge hand b : a unit of academic credit c (1) : a unit used in quoting prices (as of stocks, bonds, and commodities) (2) plural : a percentage of the face value of a loan often added as a placement fee or service charge