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 ?
How is the pen cap in this experiment similar to a fish that has an airfilled swim bladder?
The tight time requirements highlight the fact that the CAP is about the collection process, affording the taxpayer an expedited review of alleged IRS procedural defects.
Some importers are unhappy, though, complaining that Chilean construction specifications for products such as concrete-reinforcing rebar give CAP an advantage and act as a barrier to entry.
It doesn't mean that the caps themselves will "sunset" in 2005--indeed, they'll go on forever until Congress says otherwise.
He says that decoration enables American Identity and its clients to create a cap that identifies with the end user This gives clients' brands "strong individuality" and supports the brand promise, VantHul says.
A full copy of Fitch's Credit Analysis report about CAP can be found within FitchResearch, Fitch's subscription-based web site, located at www.
The results of the May 2006 Annual Full Country Index Review for the MSCI Standard Index Series, the MSCI Pan-Euro and Euro Indices, the MSCI China A Index and the MSCI GDP Index Series, and the Semi-Annual Index Review for the MSCI Small Cap Index Series, the MSCI Global Value and Growth Index Series, the MSCI US Equity Indices as well as the MSCI US REIT Index have also been posted on MSCI's web site at www.
The results of the May 2006 Semi-Annual Index Review for the MSCI US REIT Index, the MSCI Small Cap Index Series, the MSCI Global Value and Growth Index Series and the MSCI Kokunai Indices as well as the Annual Index Review for the MSCI Standard Index Series, the Pan-Euro and Euro Indices and the MSCI China A Index have also been posted on MSCI's web site at www.
Zacks is excited to leverage our years of investment research and quantitative modeling experience to create this new semi-active small cap index", says Mitch Zacks, Vice President of Zacks Investment Research.
Jones cited several high-profile CAP implementations, including the United States National Oceanic and Atmospheric Administration (NOAA) and the United States Geological Survey (USGS).
The additions to the MSCI KOKUNAI Large Cap 200 Index are Ibiden Co and TBS Tokyo Broadcasting.