In context with bank interest rates, if an interest rate is reduced by 50 basis points it means an effective reduction of
In context with bank interest rates, if an interest rate is reduced by 50 basis points it means an effective reduction of ___:
[A]50%
[B]5%
[C]0.5%
[D]0.05%
0.5%
Basis Points is a unit of measurement which is equal to 1/100th of 1%. This is used to measure changes in interest rates, stock-market indices or yield on fixed income securities. For example, if an interest rate is reduced by 50 basis points it means an effective reduction of 0.5%.