Super Finance Glossary
Over 10,000 financial glossary terms...
Cap
Cap
Definition: An upper limit on the interest rate on a floating-rate note (FRN) or an adjustable-rate mortgage (ARM). Also, an OTC derivatives contract consisting of a series of European interest rate call options; used to protect an issuer of floating-rate debt from interest rate increases. Each individual call option within the cap is called a caplet. Opposite of a floor.
Definition: An upper limit on the interest rate on a floating-rate note (FRN) or an adjustable-rate mortgage (ARM). Also, an OTC derivatives contract consisting of a series of European interest rate call options; used to protect an issuer of floating-rate debt from interest rate increases. Each individual call option within the cap is called a caplet. Opposite of a floor.
Cap
Definition: A limit placed on adjustments in adjustable rate mortgages to protect the borrower from large increases in the interest rate or the payment level.
Definition: A limit placed on adjustments in adjustable rate mortgages to protect the borrower from large increases in the interest rate or the payment level.
