## 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

- lying underneath
*We dug down to the***underlying**rock.

- basic or fundamental
*Points and straight lines are***underlying**elements of geometry.

- implicit
*Many nursery rhymes have an***underlying**meaning.

*The above text is a snippet from Wiktionary: underlying*

and as such is available under the Creative Commons Attribution/Share-Alike License.

and as such is available under the Creative Commons Attribution/Share-Alike License.