Math in Daily Life : How to Calculate Basis Points

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Calculating basis points can be complicated, but it helps to first understand the definition of a basis point. Find out how basis points can be used to reflect changes in interest rates with lessons from a math teacher in this free video on math calculations for daily life.

Expert: Jimmy Chang
Bio: Jimmy Chang has been a math teacher at St. Pete College for nearly a decade. He has a master's degree in math, and his specialties include calculus, algebra, liberal arts, math and trigonometry.
Filmmaker: Christopher Rokosz

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Sure would be nice if we could see what you wrote down.

mdellertson

Let me clarify the matter:
If you take 1% and divide it in 100 units you have 1 Basis point
So 1 Basis points = 1%/100
100 basis points is equal to 1%,
so:
10 basis points is 0.10%,
25 basis points is 0.25%,
50 Basis points is 0.5%.

The formula is: X Basis points /100 = Answer %

How much are 300 basis points: 300 Basis Points/ 100 = 3%
How much are 40 basis points: 40 Basis Points/100 = 0.4%
How much are 25 basis points: 25 Basis Points/100 = 0.25%

Your interest rate for this mortgage loan is 3.25%, but because you are so an amazing customer I can lower you interest rate in 15 Basis points.
What does it mean?
15 Basis points/100 = 0.15% So the interest rate at 3.25% - 0.15 % = 3.10%
For being an amazing customer your rate is now 3.10%, I lower your interest rate in 15 basis points = 0.15%

juanvaldez