Basis Point and Its Relation with Stock Market

A basis point can be defined as the unit of measuring which is used in finance related matters to tell about the percentage change in value of that particular financial instrument. Generally, basis point is used to show changes in the interest rates and bond yields. 

Basis point is used to calculate equity indexes also. They are generally used to tell the changes which occur in equity indexes and also help in calculating the fluctuations that are seen in interest rates. Basis point is used so that there are no chances of doubt left, as this basis point brings accuracy with it. Values that are given by the basis point are accurate and exact. This shows that basis point holds an important place in stock markets as they will give the exact figure of fluctuations that occur in stock market and those figures can be understood easily by others if the figures are shown with the help of base points. Basis point removes the error which can occur due to changes in percentages as the figures are accurate.