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)
“The dominant metaphor of conceptual relativism, that of differing points of view, seems to betray an underlying paradox. Different points of view make sense, but only if there is a common co-ordinate system on which to plot them; yet the existence of a common system belies the claim of dramatic incomparability.”
—Donald Davidson (b. 1917)
“Mothers seem to be in subtle competition with teachers. There is always an underlying fear that teachers will do a better job than they have done with their child.... But mostly mothers feel that their areas of competence are very much similar to those of the teacher. In fact they feel they know their child better than anyone else and that the teacher doesn’t possess any special field of authority or expertise.”
—Sara Lawrence Lightfoot (20th century)