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Hei everyone!!
I just started working in the finance and investment field. So now I need to know what the difference between annual cap and annual spread is.
Can anyone explain it!
That would be awesome!
Thanks
In elation to ARMs, annual cap limits the amount a variable rate can go up in any one year. Spread usually refers to the differences between something like the bid and ask price of a security. In terms of mortgages, it might be the difference between the interest the bank is receiving on a loan versus the interest they are paying out on the borrowed funds.