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Interest rate cap - Financial definition

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Translations:      FR  cap (n.m.) , plafond sur taux d'intérêt (n.m.)     ES  tope de tasa de interés (n.m.)     DE  Zinscap (n.m.) 

Concise definition of the term interest rate cap

An interest rate cap is an over-the-counter contract between two counterparties which allows its buyer to protect himself against a rise in interest rates exceeding a certain predetermined level against the payment of a premium.

Comprehensive definition of the term interest rate cap

Caps can be used to guarantee a maximum cost of funds on a floating rate loan whilst still taking advantage of lower rates should they occur.

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