A floater (FRN, floating rate note) that has no cap. An embedded cap (a cap that is embedded) in a floater sets an upper bound or limit on the performance of its underlying interest rate that can determine the final outcome of the note to its holder.

The cap rate limits the payment of interest on a a specific date, over the course of the floater’s life, if a benchmark rate happens to exceed the cap level. Uncapped floaters have their payments determined freely based on the actual fixing of a benchmark on a payment date.