What is 'Price Value of a Basis Point - PVBP'

Price value of a basis point (PVBP) is 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)

BREAKING DOWN '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.

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RELATED FAQS
  1. Why are bond yields calculated in terms of basis points?

    Find out why financial analysts and publications track and quote bond yields in basis points, or bps, rather than simply ... Read Answer >>
  2. What is a basis point (BPS)?

    A basis point is a unit of measure used in finance to describe the percentage change in the value or rate of a financial ... Read Answer >>
  3. What causes a bond's price to rise?

    Learn about factors that influence the price of a bond, such as interest rate changes, credit rating, yield and overall market ... Read Answer >>
  4. Should investors focus more on the current yield or face value of a bond?

    Find out when investors should focus on a bond's current yield versus its face value, including an example of how current ... Read Answer >>
  5. What is the difference between yield to maturity and the coupon rate?

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  6. How does a bond's coupon interest rate affect its price?

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