Cap

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Cap

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

1. Informal for market capitalization.

2. In a floating-rate note or an adjustable-rate mortgage (ARM), the highest possible interest rate. For example, if one has an adjustable-rate mortgage on a house, the interest rate fluctuates periodically. However, if the homeowner has a cap on the interest rate, there is a guarantee that it will never rise above a certain percent, no matter what the ARM formula would otherwise dictate. A cap is designed to protect the person or company making the interest payments. See also: Floor, Collar.

cap

1. An upper limit on the interest rate to be paid on a floating-rate note.

Cap.

A cap is a ceiling, or the highest level to which something can go.

For example, an interest rate cap limits the amount by which an interest rate can be increased over a specific period of time. A typical cap on an adjustable rate mortgage (ARM) limits interest rate increases to two percentage points annually and six percentage points over the term of the loan.

In a different example, the cap on your annual contribution to an individual retirement account (IRA) is $4,000 for 2006 and 2007 and $5,000 in 2008, provided you have earned at least that much. If you're 50 or older, you can make an additional catch-up contribution of $1,000 each year.

CAP

see COMMON AGRICULTURAL POLICY.

cap

A ceiling on the adjustments that can be made in the payments or interest rate of an adjustable-rate loan.

Cap

Same as Float-Down.

References in periodicals archive ?
If you have a terrible toothache and can't get to a dentist right away, put a capful of 3% peroxide into your mouth and hold it for 10 minutes several times a day.
2 capfuls of Imitation Maple flavor from a container holding 2 fluid ounces (Note: I tried "real" maple syrup, but imitation works better/ cheaper.
A couple of capfuls and you've a bath full of bubbles smelling of a summer's day.
Fill the pipe with a mixture of two capfuls of household bleach to one gallon water.
You can drop in a couple of capfuls of household bleach to help sanitize the pipe and point.
Verdict: You have to use quite a lot - five capfuls in every bath - but it really does nourish and ease dry skin.
Rhona recommends putting three capfuls of Carole Franck's Shaping Oil (pounds 38.