Definition of percentage point - What it is, Meaning and Concept

Punto is a concept with a large number of meanings.In this opportunity, we are interested in highlighting its meaning as a scoring or scoring unit. Percentage , for its part, is the adjective that refers to what is expressed or calculated in a percentage amount.

To understand the notion of percentage point , anyway, we must first know that it is a percentage .It is the expression of a quantity in the manner of a fraction with 100 as denominator.In other words, the percentage indicates a certain amount existing in every one hundred units.

The percentage points are used to name the difference between two percentages.Let's look at a specific example .

A survey is conducted that determines that a political candidate X has a voting intention of 48% .This means that, of each 100 people surveyed, 48 stated that they intend to vote for the candidate X .Instead, the candidate Y reached an intention vote of 32% ( 32 individuals of each 100 showed intention to choose it).

With this data , we can say that the candidate X leads 16 percentage points to the candidate Y .The concept of percentage points is used since the difference between the two is not 16% .

What percentage points allow, in short, is to compare differences or changes between percentages.If unemployment in a country goes from 10% to 30 % , does not increase 20% , but increases 300% (initial unemployment tripled).There is the notion of percentage point: in In that case, unemployment increased by 20 percentage points.

It is important to establish that, sometimes, two terms are often confused: basic points and percentage points.Specifically, both within the scope of quotes, investments and interest rates both are used and, although it is possible not to know how to differentiate them , the following maximum must be taken into account: 100 basic points is equal to 1 percentage point.

In the same way, it is interesting to know that, daily, within the field of the currency market, the use of percentage points is used, specifically, these are used to undertake what is the calculation of the movements of prices.How is that operation done? Following these steps:-You have to subtract the sale price from the purchase price.The result will allow you to have the total loss or gain in percentage points.-To calculate what is the dollar amount per percentage point what is What you should do is know that each point of that type is equivalent to 0.0001 if the dollar is the quoted currency.In the case that the currency is another different currency, what you should do is multiply that 0.0001 by the value that that It has in dollars.-In the same way, you have to multiply the dollars by percentage point, since this way you can establish the positioning of the size.-Then you will have to proceed to multiply the gain or loss in percentage points by the amount in the mentioned US currency by points.In this way, it will be possible to know what is that profit or that loss in dollars.