If an interest rate is at 6.00% and it increases by 5 basis points, what would be the new rate?

When determining the new interest rate after an increase of 5 basis points from an initial rate of 6.00%, it is important to understand how basis points work. One basis point is equal to 0.01%, so an increase of 5 basis points amounts to an increase of 0.05% (5 x 0.01%).

Starting with the original interest rate of 6.00%, adding the 0.05% increase would result in:

6.00% + 0.05% = 6.05%.

This calculation confirms that the new interest rate would indeed be 6.05%. This highlights the need to be precise with both percentages and conversions when working with financial calculations, ensuring that an increase in basis points is accurately translated into the final percentage rate.