The formula to calculate the BPS Difference (BPSD) is:
BPSD=BPSf−BPSi
Where:
BPS Difference (BPSD) refers to the difference between two values of basis points, typically used to measure the change in interest rates or financial percentages. Basis points (BPS) are a unit of measure equal to 1/100th of a percentage point, commonly used in finance to describe changes in rates or yields.
Let's consider an example:
Using the formula to calculate the BPS Difference:
BPSD=200−150=50basis points
This demonstrates that the difference between the initial and final basis points is 50 basis points.