When investing in the stock market, the term basis point refers to a change in the value of the stock. One basis point always equals 1/100 of 1 percent. Investors and analysts commonly use basis points when discussing the increase or decrease of a stocks price. For example, a stock that increased in value by 25 percent would also increase in value by 25 basis points. You can manually calculate the basis point increase or decrease in value for a stock.

Determine the starting price of the stock. For example, assume the starting price of a stock was $10 per share.

Determine the current price of the stock. For example, assume the current price of the stock is $11 per share.

Divide the current price of the stock by the starting price of the stock. Continuing the same example, 11 / 10 = 1.1.

Subtract 1 from the current price of the stock divided by the starting price of the stock. Continuing the same example, 1.1 - 1 = .1. This figure represents the change in value of the stock expressed as a percent.

Multiply the percentage change in value for the stock by 100. Continuing the same example, .1 x 100 = 10. This figure represents the basis point change in value for the stock. In other words, the stock increased in value by 10 basis points.

#### References (2)

- "Principles of Finance"; Scott Besley and Eugene Brigham; 2008
- Math is Fun: Percentage Points