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 (former) 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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Famous quotes containing the word underlying:
“Comedy deflates the sense precisely so that the underlying lubricity and malice may bubble to the surface.”
—Paul Goodman (1911–1972)
“Every age develops its own peculiar forms of pathology, which express in exaggerated form its underlying character structure.”
—Christopher Lasch (b. 1932)
“The welfare, the happiness, the energy and spirit of the men and women who do the daily work ... is the underlying necessity of all prosperity.... There can be nothing wholesome unless their life is wholesome; there can be no contentment unless they are contented.”
—Woodrow Wilson (1856–1924)