What is the full form of BPS in the Share Market?

The BPS full form in the share market is Basis Point. A basis point is used to indicate the alterations in the rate of interest of the financial instrument. They are generally given in abbreviations such as bp, bips, bps, etc.

Key features of basis points:

The percentage change in the value of a financial instrument is expressed in basis points or bips. The unit of measurement for them is the hundredth of a percent or 0.01%. We must multiply the percent by 100 to get the number of basis points from a percentage and divide the basis points by 100 to convert them into percentages.

Why do investors use BPS?

Investors mainly make use of the basis points to indicate the incremental changes in the interest rate for securities and to report the increase in the interest rates. In order to avoid ambiguity and confusion and to report absolute and relative interest rates, especially when the difference is less than one percent, we make use of the basis points. It applies to corporate bonds, treasury bonds, credit derivatives, interest rate derivatives, etc.