When looking at terms used in calculating returns for bond yields, both percentage and basis points come up. Basis points are used for both Treasury bonds and municipal bonds. While a percent is 1/100 of 1, or 0.01, the basis point is 1/100 of a percent, or 0.0001. A change in basis points on a bond is going to precipitate a change in returns, in one direction or other. For this reason, calculate the effect of a basis point change, employing elementary decimal calculations. While a basis point may look small, the impact of basis point changes will add up over time.

## Step 1

Subtract the lower basis point amount from the higher. For instance, if the change is from 65 basis points to 30 basis points, the change is 35 basis points.

## Step 2

Convert the difference to a percentage, if you wish, dividing the basis point change total by 100. Thus 35 basis points becomes 3.5 percent. You can also achieve this by moving the decimal two places leftward.

## Step 3

Convert the difference to a percentage, dividing the basis point change total by 10,000. Thus 35 basis points becomes 0.0035 percent. You can also achieve this by moving the decimal four places leftward. This provides a decimal number for revenue calculation.

## Step 4

Multiply the decimal figure by a hypothetical investment amount (or actual one) to calculate revenue difference. Here, for a $6,000 investment, a change of 35 basis points comes to a difference of $21 in the interest paid.