interest rate cap
1interest rate cap — Under a cap arrangement, the seller of the cap will make payments to the buyer if interest rates rise above an agreed rate. The payment to be made is calculated by reference to a notional principal sum over an agreed term. In return, the buyer… …
2Interest rate cap and floor — Interest rate c An interest rate cap is a derivative in which the buyer receives payments at the end of each period in which the interest rate exceeds the agreed strike price. An example of a cap would be an agreement to receive a payment for… …
3Interest Rate Cap Structure — Limits to the interest rate on an adjustable rate loan frequently associated with a mortgage. There are several different types of interest rate cap structures including an initial, periodic and lifetime interest rate cap structure. The initial… …
4interest rate cap — See cap. American Banker Glossary An interest rate agreement in which payments are made when the reference rate exceeds the strike rate. Also called an interest rate ceiling. Bloomberg Financial Dictionary …
5Interest rate cap — Also called an interest rate ceiling, an interest rate agreement in which payments are made when the reference rate exceeds the strike rate. The New York Times Financial Glossary …
6Periodic Interest Rate Cap — A part of an interest rate cap structure on loans and mortgages. The periodic interest rate cap limits the amount by which the interest rate on an adjustable rate loan can adjust at specified adjustment dates. For example, an adjustable rate… …
7Initial Interest Rate Cap — The maximum amount the interest rate on an adjustable rate loan can adjust on its first scheduled adjustment date. This is part of the interest rate cap structure on the loan, usually a mortgage, which helps to give borrowers some protection from …
8interest rate floor — The opposite of an interest rate cap. An arrangement under which the seller, in return for a premium, will pay to the buyer the difference between the specified floor rate and the lower variable rate, should the variable rate fall below that… …
9interest rate collar — Under a collar arrangement, both an interest rate cap and an interest rate floor are sold simultaneously. The buyer ensures that if interest rates move outside an agreed range, it will receive payment from the seller. Related links collar… …
10Interest rate derivative — An interest rate derivative is a derivative where the underlying asset is the right to pay or receive a (usually notional) amount of money at a given interest rate.The interest rate derivatives market is the largest derivatives market in the… …
