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.
Price value of a basis point is also known as the value of a basis point (VBP), dollar value of a basis point (DVBP), or basis point value (BPV).
BREAKING DOWN 'Price Value of a Basis Point  PVBP'
The price value of a basis point is a method of measuring price sensitivity of a bond. This is often established by assessing the absolute change in the price of a bond if the required yield changes by one basis point (BPS). In other words, PVBP is the price change of a bond when there is a .01% (one basis point) change in the yield. Price volatility is the same for an increase or a decrease of 1 basis point in required yield.
Because this measure of price volatility is in terms of dollar price change, dividing the PVBP by the initial price gives the percentage price change for a 1basispoint change in yield. Since there is an inverse relationship between bond price and yield, as bond prices fall by decreasing dollar amounts, 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.
A bigger price value of a basis point means a bigger move in the bondâ€™s price due to a given change in interest rates. PVBP can be calculated on an estimated basis from the modified duration as Modified duration x Dirty Price x 0.0001. The modified duration measures the proportional change in the price of a bond for a unit change in yield. It is simply a measure of the weighted average maturity of a fixed income securityâ€™s cash flows. As yields fall, modified duration increases, and a higher modified duration implies that a security is more interest rate sensitive (read here more on Modified Duration). The dirty price factored into the formula is defined as the total price paid for a bond after including accrued interest on the date of purchase.
Letâ€™s assume an analyst wants to understand how a price change for a bond will affect the value of the security if yields change by 100 basis points. The par value of the bond purchased at par is $10,000, and the price value of a basis point is given as $13.55.
PVBP = modified duration x $10,000 x 0.0001
13.55 = modified duration x 1
Modified duration = 13.55
This means that if rates go down 100bp (i.e. 1%), the value of the bond will increase by 13.55% x $10,000 = $1,355.
Another way to look at this is to remember that the PVBPÂ is the price change of a bond when there is a 1 basis point change in the yield. In this case the PVBP is $13.55. Therefore, aÂ change of 100 basis point in the yield will be $13.55 x 100 = $1,355.

Basis Point (BPS)
Basis point (BPS) refers to a common unit of measure for interest ... 
Key Rate Duration
Holding all other maturities constant, this measures the sensitivity ... 
Interest Rate Sensitivity
Interest rate sensitivity is a measure of how much the price ... 
Convexity Adjustment
A convexity adjustment is the change required to be made to a ... 
Bond
A bond is a fixed income investment in which an investor loans ... 
Yield Basis
The yield basis is a method of quoting the price of a fixedincome ...

Investing
Use duration and convexity to measure bond risk
Find out how duration and convexity measures can help fixedincome investors manage risks such as interest rate sensitivity within their portfolios. 
Investing
Simple Math for FixedCoupon Corporate Bonds
A guide to help to understand the simple math behind fixedcoupon corporate bonds. 
Investing
Why Investors Should Use Duration to Compare Bonds
Duration is a helpful metric that determines a bond's sensitivity to interest rates. 
Investing
Understanding Interest Rates, Inflation And Bonds
Get to know the relationships that determine a bond's price and its payout. 
Financial Advisor
How Rising Rates Impact Bond Mutual Funds
The interest rate increase by the Fed was one of the most widely anticipated in history. Here's what it means for bond mutual funds. 
Investing
4 Basic Things to Know About Bonds
Learn the basic lingo of bonds to unveil familiar market dynamics and open to the door to becoming a competent bond investor. 
Investing
Understanding Bond Prices and Yields
Understanding this relationship can help an investor in any market. 
Investing
Find The Right Bond At The Right Time
Find out which bonds you should be investing in and when you should be buying them.

How does duration impact bond funds?
Learn how duration for a bond fund measures the risk the bond portfolio has to a rise in interest rates, and see how managers ... Read Answer >> 
How to calculate a bond's modified duration with Excel
Learn more about the modified duration in fixed income securities and how to calculate a bond's modified Macaulay duration ... Read Answer >> 
What is the relationship between current yield and yield to maturity (YTM)?
Learn about the relationship between a bond's current yield and its yield to maturity, including how the market price of ... Read Answer >> 
What causes a bond's price to rise?
Should you invest into bonds? Learn about factors that influence the price of a bond, such as interest rate changes, credit ... Read Answer >>