The term "20 basis points" is equivalent to what percentage?

The term "basis points" is a common unit of measure in finance, particularly when discussing interest rates or financial instruments. One basis point is equal to one-hundredth of a percentage point. Therefore, when we refer to "20 basis points," we can calculate its percentage equivalent by recognizing that 20 basis points means 20/100 of a percentage point.

This is equal to:

20 basis points = 20 ÷ 100 = 0.20%

Thus, the correct answer is that "20 basis points" is equivalent to 0.20%. Understanding this relationship allows individuals involved in finance and mortgage lending to communicate more precisely about interest rates and fees.