Warning: Creating default object from empty value in /hermes/bosnacweb04/bosnacweb04ai/b1550/ipg.lantanasolutionsbh98965/fincyclopedia/wp-content/plugins/independent-core/admin/ReduxCore/inc/class.redux_filesystem.php on line 29 Interest Rate Cap – Fincyclopedia
[wpdreams_ajaxsearchpro id=44 ]
  • Monday, April 28, 2025
  • The Financial Encyclopedia
[wpdreams_ajaxsearchpro id=43 ]

Derivatives

  Derivatives   |   Terms
  • 1493
  • April 15, 2021
[addtoany]
Notice: Undefined variable: myString in /hermes/bosnacweb04/bosnacweb04ai/b1550/ipg.lantanasolutionsbh98965/fincyclopedia/wp-content/themes/independent/template-parts/post/content-single.php on line 41

Interest Rate Cap

An OTC interest rate derivative, or simply a contract on an interest rate whereby the seller (or the writer) pays the buyer, at periodic payment dates, the positive difference between the market interest rate (the reference interest rate) and the agreed strike price (the cap). The interest rate cap is equivalent to a series of call options on interest rate. For the buyer to purchase a cap, a premium should be paid to the seller. Cap expirations range between 1 and 7 years. The periodic payment may be monthly, quarterly or semiannual.


[related_posts_by_tax title="See also" posts_per_page="10" taxonomies="post_tag"]

[pt_view id=78ecc7bubm]
[su_box title="Watch on Youtube" style="soft" box_color="#f5f5f5" title_color="#282828" radius="2" class="" id=""][su_row class=""][su_column size="1/1" center="yes" class=""] [/su_column][/su_row][/su_box]

Latest Terms

Remember to read our privacy policy before submission of your comments or any suggestions. Please keep comments relevant, respectful, and as much concise as possible. By commenting you are required to follow our community guidelines.

Comments

    Leave Your Comment

    Your email address will not be published.*