Ceiling

AAA

DEFINITION of 'Ceiling'

The maximum level permissible in a financial transaction. Ceiling refers to the highest price, the maximum interest rate, or the largest of some other factor involved in a transaction. For example, the interest rate ceiling on a credit card is the highest interest rate that could be charged for purchases, cash advances, penalty APR, etc. An adjustable rate mortgage (ARM) might include an interest rate ceiling; the maximum interest that the mortgagor would be allowed to pay.

INVESTOPEDIA EXPLAINS 'Ceiling'

Ceilings are intended to keep prices, interest rates, rents, charges, debts and other financial transactions under certain levels. Examples include bond issuers who may cap the amount of interest they would be willing to pay; investors who attach a price ceiling or limit to a position order; maximum rents allowable for certain properties; or debt ceilings, the amount of debt above which an entity can no longer borrow, as issued by local, state or federal governments.

RELATED TERMS
  1. Limit Order

    An order placed with a brokerage to buy or sell a set number ...
  2. Price Ceiling

    The maximum price a seller is allowed to charge for a product ...
  3. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  4. Large Trader

    An investor or organization with trades that are equal to or ...
  5. Interest Rate Ceiling

    The maximum interest rate that a financial institution can charge ...
  6. Floor

    The lowest acceptable limit as restricted by controlling parties. ...
Related Articles
  1. Credit & Loans

    Mortgages: Fixed-Rate Versus Adjustable-Rate

    Both of these have advantages and disadvantages depending on your financial needs and prospects.
  2. Active Trading Fundamentals

    Support And Resistance Basics

    Understanding the concept of Support and Resistance in trading can drastically improve your short-term investing strategy.
  3. Charts & Patterns

    Analyzing Chart Patterns

    Learn how to evaluate a stock with a few easy-to-identify patterns.
  4. Active Trading Fundamentals

    Support And Resistance Reversals

    Discover how these influential levels can switch roles.
  5. Credit & Loans

    Getting A Mortgage After Bankruptcy Or Foreclosure

    Millions of Americans had homes foreclosed and millions more went into bankruptcy. Here are the necessary qualifying steps to buying a home again.
  6. Taxes

    Will Itemized Deductions Get You A Bigger Refund?

    April and taxes are due soon. If you need to file your return, you might have to decide if itemizing your deductions this year will net you a better deal.
  7. Home & Auto

    Save $30,000 For A Home Down Payment In 5 Months

    Before tackling mortgage rates, home maintenance costs and utilities, every home buyer must first gather the funds for a mortgage loan down payment.
  8. Credit & Loans

    Getting A Mortgage When Building Your Own Home

    It's much harder to get a loan when you're building a home, not moving into one. Here's where to look and what to expect.
  9. Credit & Loans

    Understanding Loan-to-Value Ratio

    Loan-to-value ratio (LVR) is a tool used to evaluate the risk in a collateralized loan, usually a mortgage loan.
  10. Credit & Loans

    Surprising Ways A Mortgage Affects A Credit Score

    It takes a good credit score to get favorable mortgage rates. Then, how you pay a mortgage will shape your score – just having one can lower it at first.

You May Also Like

Hot Definitions
  1. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  2. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  3. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  4. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  5. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  6. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
Trading Center