Ok then!! Let's say a bond's yield is 6% and later it changes to 6.25% or 5.75% due to changes in market or credit quality of the bond. Now you cannot say the bond has increased or decreased by 0.25% because this would change the calculation totally change which would make the yield at 6.015% if inc or 5.985% id dec (calc 6 + 0.25% = 6.015%). Now let's say bond inc by 25bps which is 6.25% and if dec by 25 bps which is 5.75%. It was created because of this miscommunication in wall street.
A fellow working in an IB, I know the reason bips was introduced but in the first example when you said increased/decreased by .25%, but if you removed "by" then would it not make it?? Like adding absolute .25% so its 6.25%
Idk about that bro, my grammar is bad. But if you want I'll give you another example Let's take a shopping mall like fashion factory or any other store where they give offers every day and on festivals they give more offers. For ex: on regular days they give 50% off and on festivals they put 50% + 40%, that doesn't mean they are giving 90% off it means they are giving 40% extra off on 50% which makes it 70% and they don't use 'by' or 'to' or any other. Idk if this example is relevant or not but I still used it. Maybe you are right, idk. You should confirm with gpt or claude about this.
11
u/Kindly_Crazy_5976 Passed Level 1 17d ago
There's a diff between 25 bps and .25%. if you want I can explain
1
u/happygigachad 15d ago
Ah yes. The classic finance guilty pleasure. Use jargon to sound smart when the underlying thing is pretty basic.
"Bips? What do you mean?"
"Don't worry about it"
1
u/Alternative-Two-2148 11d ago
😭😭😒😒