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Price Value of a Basis Point - PVBP

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Definition of 'Price Value of a Basis Point - PVBP'

A measure used to describe how a basis point change in yield affects the price of a bond.

Also knows as the "value of a basis point" (VBP) or "basis point value" (BPV).

Price Value of a Basis Point (PVBP)
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Investopedia explains 'Price Value of a Basis Point - PVBP'

There is an inverse relationship between bond price and yield. As bond prices decrease, their yields increase and vice versa. The degree of change in bond price for each basis point change in yield is determined by a number of other factors, such as the bond's coupon rate, time to maturity and credit rating.

Related Definitions

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    Basis Point - BPS

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly used for calculating changes in interest rates, equity ...
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  • Bond

    A debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used ...
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  • Yield

    The income return on an investment. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment's cost, ...
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    • Beep

      Financial industry jargon for "basis point." The term came into popular usage as an easier way of referring to the basis points' "BPS" acronym. It is sometimes also pronounced "bips".
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