How much does a 'basis point' equate to in percentage terms?

How much does a 'basis point' equate to in percentage terms?

• A. One per cent
• B. One-hundredth of one per cent
• C. Ten per cent
• D. Zero point five per cent

Answer: (B)

The main idea is understanding what a basis point represents. A basis point is one hundredth of a percent, which is 0.01%. There are 100 basis points in 1 percent, so 100 basis points equal 1%. That’s why the correct choice is the one that says one-hundredth of one percent. It matches the definition used in finance for small changes in rates, fees, or yields. For context, 25 basis points would be 0.25%, and 100 basis points would be 1%. The other options correspond to larger values: 1% (100 basis points), 10% (1000 basis points), and 0.5% (50 basis points).

The main idea is understanding what a basis point represents. A basis point is one hundredth of a percent, which is 0.01%. There are 100 basis points in 1 percent, so 100 basis points equal 1%.

That’s why the correct choice is the one that says one-hundredth of one percent. It matches the definition used in finance for small changes in rates, fees, or yields. For context, 25 basis points would be 0.25%, and 100 basis points would be 1%.

The other options correspond to larger values: 1% (100 basis points), 10% (1000 basis points), and 0.5% (50 basis points).