Bull and Bear market
If you're trading, you've probably heard these words thrown around? Is it even related to the market?
Commonly used unit of measurement to track interest rates and changes in other financial percentages. Basis points are frequently expressed as “bps.”
One basis point = 0.01% - it’s 1/100th of 1%
Consequently: 1% = 100 bps
The term comes from the move from one percentage to another or the spread between interest rates. Since small percentage changes can have a larger outcome, the “base” move is a fraction of a percentage change. This measurement is mostly used for interest rates, equity indices and fixed-income securities (bond pricing).
Pop Quiz:
If the price of the S&P 500 index rises by 20 bps, what percentage change has occurred?