Basis Point
One hundredth of one percentage point (0.01%) — the standard unit for quoting changes in interest rates, yields, and credit spreads.
1 bp = 0.01% = 0.0001 | DV01 = Modified Duration × Bond Price × 0.0001
A basis point (bp or bps) is 0.01%, or 1/100th of a percentage point. It is the standard unit of measurement in fixed income and rate markets, used to avoid ambiguity when quoting small rate changes.
When the Fed raises rates by "25 basis points," it means 0.25 percentage points — from, say, 5.25% to 5.50%. A credit spread widening by "50 basis points" means it moved from, say, 1.50% to 2.00% above Treasuries.
For duration math: a 1 basis point yield change is used to compute DV01 (dollar value of a 1bp move) — the actual dollar P&L for a $1 basis point change in yield on a given position.