How to Calculate the Basis Point of a Security
- 1). Determine the value of the security. For example, assume a security has a value of $5,000.
- 2). Determine the number of basis points associated with the security. For example, assume purchasing a security requires you to pay 5 basis points.
- 3). Multiply the basis points by 0.0001. Continuing the same example, 0.0001 x 5 = .0005. This figure represents the basis points expressed as a decimal.
- 4). Multiply the basis points expressed as a decimal by the value of the security. Continuing the same example, $5,000 x 0.0005 = $2.50. This figure represents the monetary value of the basis points for the security.