caplet

Meaning

Noun

• A smooth-coated tablet shaped like a capsule, used as a tamper-resistant alternative to a capsule, or an easy-to-swallow alternative to regular tablets.
• A component of an interest rate cap, a derivative instrument that effectively prevents the interest payments on an otherwise variable-rate loan from exceeding an agreed level (the "cap"). Each "caplet", analysable as a call option, covers one interest accrual period (such as three months); the whole interest rate cap is made up of a series of consecutive caplets.

Origin

• cap + -let