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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.


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.


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


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.




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


Same as Float-Down.

References in periodicals archive ?
Dr Majid observed that one litre of camel milk had nearly
Camel milk was now available in the markets on the rates of Rs 110 per litre, he said added that basic aim of marketing was to improve financial condition of the camel farmers.
Since the European Union allowed its import in 2013, camel milk has been gaining global popularity and its production is booming in Middle Eastern countries.
At the heart of the festival is, of course, the much-loved and celebrated camel, reflecting the uniting role it has played for the Saudi Kingdom and the Gulf throughout history.
A private member's bill that would require the 3,500 camels owned by Bedouins in the Negev to be registered and identified with a chip, and for owners to be criminally liable for damage caused by them, has been sitting in the Knesset for a year without action.
The month-long King Abdulaziz Camels Festival 2018 will celebrate the crucial role of the camel through an eclectic mix of traditional events, competitions and heritage-focused activities, including new and innovative activations detailed below:
Low in fat and cholesterol, camel milk also boasts higher levels of vitamin C and iron.
Future aspects to the researches and production of camels within current climate change" was the slogan of the Third International Scientific Conference of camels Research and Production which organized by Deanship of Scientific Research, in Sudan University of Science and Technology in cooperation with ministry of Fish and Animal Wealth Resources and participation of numbers of researchers and scientists in field of camels from 20 states.
In this period, camel owners are keen to choose a site that is known by the camel's tamers and experts.
Tourists visiting the Nubra Valley make sure to visit the sand dune at Hunder to take camel rides.
An Iranian tire company is now selling a reflective collar for camels in an effort to reduce the large number of camels killed in nighttime traffic accidents in southern Iran.
From the Al Wadah white camel to, the Al Majahateer dark camel and the Al Homor reddish, brown camel, various features considered most beautiful to each breed are closely assessed to determine the deserving winners.