Basis
This is a financial term which is widely used and has many different meanings. In most circumstances, it refers to "cost" or "tax" basis, i.e. the difference between expenses and price when calculating the tax implications of a transaction.
Here's a really simple example: Vanessa buys a few shares of Flying High Medicines LLC. After any fees, expenses and her broker's hefty commission (because she decided to go the expensive route instead of trading for free through an e-brokerage), her cost basis is the leftover purchase price. This will be used to calculated capital gains or losses in the event she decides to sell her shares. If she makes a nice haul from the sale of her shares, she'll be, uh...flying high.
Related or Semi-related Video
Finance: What Is a Basis Point?124 Views
finance a la shmoop what is a basis point?
well one percentage point is a hundred basis points, half a percentage is 50
basis points, five percentage points is? yeah we're gonna make you do that one on [frowning man talks to camera]
your own. well the basic idea is that in very large financial transactions those
involved need highly granular computation grids, and basis points
divid interest rates much more tightly. if a company borrows three billion
dollars just noting that the rate is four percent is really vague. it would
need to be noted as four point zero zero percent. why? because just one basis point [equation on screen]
i.e. one hundredth of a percent per year on three billion dollars borrowed
is still a lot of money. that is one basis point on three billion bucks is
300 grand .so basis points are a real thing in high finance transactions and [smiling man talk to camera]
okay okay the answer is 500 basis points. yeah all right now you can go back to
spinning this thingy. [man spins fidget spinner]
Up Next
What is Cost Basis? For accounting purposes, the cost basis is the amount invested at the time of asset purchase. That is subtracted from the sale...
Tax basis is your cost for assessing how much you owe in taxes, and is determined by multiplying your gains by your tax rate.
When you realize a gain or loss, it means that you turn an investment into cash. Thrilling, we know.