When is an interest rate cap considered at the money? 24 Jun 1999
Does the "moneyness" of a caplet depend upon the spot or forward interest rate?
Disclaimer ...
INTEREST RATE CAP - The maximum interest rate increase of an Adjustable Rate Mortgage. For example: a 7...
INTEREST RATE CAPS - An interest-rate cap places a limit on the amount your interest rate can increase....
Interest 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.
Interest rate floor ...
Interest Rate Cap
Maximum interest rate allowed, during an adjustment period, on the monthly payment of an adjustable rate mortgage.
Interest Rate Ceiling
Highest interest rate allowed to be charged on an adjustable rate mortgage.
Interest Rate Cap - A provision in an ARM loan which limits the degree to which the interest rate may increase at any adjustment period.
Interest Rate Floor - The lowest rate to which the interest rate may drop on an adjustable rate loan.
Interest Rate Caps And Floors: Option contracts for specified periods, based on interest rates, for which a cost (premium) is settled in advance. In the case of a cap, the agreement places a maximum on the cost of interest rate borrowings.
Interest rate cap
An interest rate agreement in which payments are made when the reference rate exceeds the strike rate. Also called an interest rate ceiling.
Interest rate on debt ...
Interest rate cap
Contract clause which establishes that the variable interest rate of a finance deal or debt must not exceed a maximum fixed value (ceiling) at the time it is issued.
Interest Rate Cap
A limit that is imposed upon interest rate increases and decreases for an adjustable rate loan. The cap or limit can be imposed from one adjustment period to the next or over the entire life of the loan.
interest rate cap in a commercial loan negotiated at loan origination. The lender agrees to fix the maximum interest rate charged on a floating rate loan, for which the borrower pays a fee.
Interest rate caps/floors
Interest rate ceiling
Interest rate derivative
Interest rate derivatives
Interest Rate Derivatives (finance)
Interest Rate Differential
Interest rate floor
Interest rate floor
Interest Rate Future ...
Interest rate cap Also called an rate ceiling, an in which payments are made when the exceeds the strike rate.
Interest rate ceiling Related:
Interest rate floor An in which payments are made when the falls below the strike rate.
Interest Rate Cap Structure
Limits to the interest rate on an adjustable-rate loan - frequently associated with a mortgage.
See: Interest rate cap
Interest rate floor
An interest rate agreement in which payments are made when the reference rate falls below the strike rate. Related: Interest rate cap.
Interest rate futures contract ...
Because interest rate caps/floors are equivalent to bond puts and calls respectively, the above analysis shows that caps and floors can be priced analytically in the Hull-White model.
For example, an interest rate cap limits the amount by which an interest rate can be increased over a specific period of time.
Options can be purchased on futures on interest rates, for example (see interest rate cap), and on commodities like gold or crude oil. A tradeable call option should not be confused with either Incentive stock options or with a warrant.
It may relate to a management buyout or to a package that may include an interest rate cap and collars to finance a specific package. More than one bank may be involved.
mortgage) has an initial interest rate that remains in effect for one year, after which the rate is adjusted, once annually. Adjustments are based on the movement of an underlying benchmark, but do not exceed specified interest rate caps.
If the index increases, the interest rate increases unless an interest rate cap is reached. Often, these interest rates are the rates for the U.S. Treasury securities.
Interest rate caps may be applied in an effort to prevent the rate on an ARM from exceeding a specified limit. The hybrid ARM, a popular variation on the ARM, has a fixed rate of 3 to 10 years and is pegged to an index thereafter.
interest rate cap A provision of an adjustable rate mortgage limiting how much interest rates may increase in a single adjustment period. interest rate ceiling For an adjustable rate mortgage, the maximum interest rate that could be charged.
 See also: Interest rate swap, Banks, Interest rate floor, Interest rate risk, Internal rate of return
|
