Price Value of a Basis Point - PVBP

AAA

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)

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 TERMS
  1. Beep

    Financial industry jargon for "basis point." The term came into ...
  2. Yield

    The income return on an investment. This refers to the interest ...
  3. Basis Point - BPS

    A unit that is equal to 1/100th of 1%, and is used to denote ...
  4. Bond

    A debt investment in which an investor loans money to an entity ...
  5. Treasury Direct

    The online market where investors can purchase federal government ...
  6. Treasury Yield

    The return on investment, expressed as a percentage, on the debt ...
Related Articles
  1. Bond Basics Tutorial
    Retirement

    Bond Basics Tutorial

  2. Are Equity-Indexed Annuities Right For ...
    Savings

    Are Equity-Indexed Annuities Right For ...

  3. Introduction To Commercial Paper
    Bonds & Fixed Income

    Introduction To Commercial Paper

  4. Projected Returns: Honing The Craft
    Retirement

    Projected Returns: Honing The Craft

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center