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.
To prevent excessively high payment increases, ARM's place a cap on the amount by which the interest rate may rise at any single adjustment, over the life of the loan, or both.
A limit placed on adjustments in adjustable rate mortgages to protect the borrower from large increases in the interest rate or the payment level.
A limit in how much an adjustable rate mortgage's monthly payment or interest rate can increase. A cap is meant to protect the borrower from large increases and may be a payment cap, an interest cap, a life-of-loan cap or an annual cap. A payment cap is a limit on the monthly payment. An interest cap is a limit on the amount of the interest rate. A life-of-loan cap restricts the amount the interest rate can increase over the entire term of the loan. An annual cap limits the amount the interest rate can increase over a twelve-month period.
A limit, such as one placed on an adjustable rate mortgage, on how much a monthly payment or interest rate can increase or decrease, either at each adjustment period or during the life of the mortgage. Payment caps do not limit the amount of interest the lender is earning, so they may cause negative amortization.
For an adjustable-rate mortgage (ARM), a limitation on the amount the interest rate or mortgage payments may increase or decrease. See also "Lifetime Payment Cap," "Lifetime Rate Cap," "Periodic Payment Cap," and "Periodic Rate Cap"
To put in the last raise permitted on a betting round. This is typically the third or fourth raise. Dealers in California are fond of saying "Capitola" or "Cappuccino."
Abbreviation for catabolite activator protein.
- See Central Arizona Project (CAP) Aqueduct
- Browse Related Terms: All-American Canal, CAP, Central Arizona Project (CAP) Aqueduct, Grazing lease, Locatable Minerals, Mineral Leasing Act of 1920 (MLA), Off-highway vehicle (OHV) or off-road vehicle, Permittee, Right-of-way (ROW)
(also called "Lid") A layer of relatively warm air aloft, usually several thousand feet above the ground, which suppresses or delays the development of thunderstorms. Air parcels rising into this layer become cooler than the surrounding air, which inhibits their ability to rise further and produce thunderstorms. As such, the cap often prevents or delays thunderstorm development even in the presence of extreme instability. However, if the cap is removed or weakened, then explosive thunderstorm development can occur.
The cap is an important ingredient in most severe thunderstorm episodes, as it serves to separate warm, moist air below and cooler, drier air above. With the cap in place, air below it can continue to warm and/or moisten, thus increasing the amount of potential instability. Or, air above it can cool, which also increases potential instability. But without a cap, either process (warming/moistening at low levels or cooling aloft) results in a faster release of available instability - often before instability levels become large enough to support severe weather development.
(1) Combat Air Patrol. (2) Civil Air Patrol. (3) Crisis Action Planning. (4) Configuration and Alarm Panel.