You might run across the phrase “Basis Points” in the financial sector. It is a standard practice to hear percentage and basis points at the same time. Today with the help of two appropriate examples and a straightforward calculation, we will demonstrate how to convert a percentage to basis points in Excel in this article. I hope you find this useful and convenient.
📁 Download Excel File
The sample worksheet that was used during the discussion is available to download for free right here.
What Are Basis Points?
Basis Points, sometimes known as BPS, are a measuring system. It is frequently used in economics and finance to gauge changes in interest rates and percentages. One basis point is equal to one-tenth of one percent. Essentially, one basis point is equivalent to 0.01% or 1/10000. Basis points are used most frequently in the financial markets to track the movement or change in the price of an item.
1 Basis Point = 1%/100 = 0.01% = 0.0001
Confusion about whether the new interest rate will be 11% or 20% may result from a 10% interest rate rise plus a 10% interest rate. However, it would be far simpler to comprehend that the new interest rate would be 11% if it were stated as a 10% interest rate + 10 basis points.
Why Basis Points Instead of Percentages?
Because they may be clearer and eliminate any misunderstanding as it is bigger in terms of values. Traders utilize basis points to represent changes in value or rate. This can hasten conversations and help traders avoid blunders. Making sure there is clarity can be crucial for traders since the prices of financial instruments are sometimes extremely sensitive to even minute fluctuations in the underlying interest rates.
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Learn to Convert Percentage to Basis Points in Excel with These 2 Examples
Converting Percentage to Basis Point is a simple operation. To help you comprehend the issue better, we’re still going to use two instances. Our duty is to deliver you the easiest and most convenient way of learning. Check out each of these Excel samples of how to Convert the Percentage to Basis Points in Excel.
1. Converting Interest Rate into Basis Points
This is an arithmetic simple formula that multiplies a cell with a specific number. As we already know what Basis Point is. We should know why we are multiplying by 10000 to convert the percentage to basis points in excel.
⬇️⬇️ STEPS ⬇️⬇️
- Start by Initially choosing cell D6.
- Now enter the subsequent formula in the cell.
- Press Enter. You may get results like any of these two results down below the first one to indicate that the values can be shown in numbers and the second one is in percentage.
This photo below shows us that we got the value in percentage. We have to change the format to get our desired result. I am showing you how to do that.
- But as we know Basis Point has number values not percentages so we need to change that. So, go to the ribbon and select Home, and then you may see Percentage in the Number section. It’s the formatting of value in that cell.
- Next, we select the more option of the Percentage tab and select General or Number. Any of them will do. We are selecting General here.
- See the change here. There is no percentage value anymore.
- To duplicate the formula up to cell D11, double-click the Fill Handle button using the mouse cursor. If you don’t know how to use the Fill Handle Icon to Copy or duplicate in various ways Click Here to learn.
- Here we have successfully calculated all the Basis Points of the problem.
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2. Converting Percentage Change into Basis Point
In our practice workbook, we have provided this problem also. The more problems we solve the more we will be familiar with the process and able to solve such problems. Here we will take a tour to convert percentages to basis points in excel in a different scenario.
⬇️⬇️ STEPS ⬇️⬇️
- First, we will determine the percentage change. For that, we will be using the following formula.
- Next, we will input the formula for Basis Point like below.
- The result will be like the following picture.
- Now we will use the Fill Handle Tool to fill the rest of the cells accordingly.
Convert Basis Points to Percentage in Excel
This is just the reverse of the previous approach we have just seen above. We may need to know the percentage value for any given situation from Basis Point. This is the way we are going to convert to the desired result.
⬇️⬇️ STEPS ⬇️⬇️
- First, select the cell you want the percentage value in like in the previous approach.
- Now write in the following formula.
- Hit Enter and use the Fill Handle Bar Tool to do the same for the rest of the cells.
I am providing a box having the Basis Point and Percentage of different values side by side so that you can have a clear idea.
📄 Important Notes
🖊️ Check how many zeros are you typing in the formula. Must be four zeros.
🖊️ Check the output format before further calculation.
📝 Takeaway from This Article
📌 A brief explanation of Basis Point.
📌 The purpose of using Basis Point over percentage.
📌 How to use basic multiplication to convert a percentage format to basis points in excel.
I hope you were able to use the techniques I demonstrated in this Excel lesson to convert a percentage to basis points in excel. Practice on your own after taking a look at the Convert Percentage to Basis Points in excel Excel file in the practice workbook as I’ve provided above cause practice makes a man perfect. I earnestly hope you can use it. Please share your experience with us in the comment box about how your experience was throughout the article and what we need to improve or add to make things better for you folks. Again if you have any problem regarding Excel spit it in the comment box. The Excelden crew is always available to answer your questions. Keep educating yourself by reading. For more Excel-related articles please visit our website Excelden.com.
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