UNDERLYING

Underlying

In finance, the underlying of a derivative is an asset, basket of assets, index, or even another derivative, such that the cash flows of the derivative depend on the value of this underlying. There must be an independent way to observe this value to avoid conflicts of interest.

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underlying

Adjective

  1. lying underneath
    We dug down to the underlying rock.
  2. basic or fundamental
    Points and straight lines are underlying elements of geometry.
  3. implicit
    Many nursery rhymes have an underlying meaning.


The above text is a snippet from Wiktionary: underlying
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