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:
“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)
“Sport in the sense of a mass-spectacle, with death to add to the underlying excitement, comes into existence when a population has been drilled and regimented and depressed to such an extent that it needs at least a vicarious participation in difficult feats of strength or skill or heroism in order to sustain its waning life-sense.”
—Lewis Mumford (1895–1990)
“Every age develops its own peculiar forms of pathology, which express in exaggerated form its underlying character structure.”
—Christopher Lasch (b. 1932)