A basis point is a unit equal to 1/100th of a percentage point. It is frequently used to express percentage point changes of less than 1%. It is common practice in the financial industry to use basis points to denote a rate change in a financial instrument (such as a bond). For example, a rate change from 6.7% to 6.9% reflects a change of 0.2 of a percentage point or 20 basis points.
- Credit Crisis Glossary. econ4u.org.