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Made, Stored and
Supported in the USA

Cap

A cap, also referred to as an interest rate cap, is a risk management tool that provides protection against increasing interest rates while maintaining the ability to participate in favorable rate movements. It is an agreement between a buyer and a financial institution such as a bank to receive compensation if the reference rate moves beyond an agreed level, known as the strike rate. One major type of loan that uses interest rate caps is an adjustable rate mortgage, or ARM.