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 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)
“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)
“The “female culture” has shifted more rapidly than the “male culture”; the image of the go-get ‘em woman has yet to be fully matched by the image of the let’s take-care-of-the-kids- together man. More important, over the last thirty years, men’s underlying feelings about taking responsibility at home have changed much less than women’s feelings have changed about forging some kind of identity at work.”
—Arlie Hochschild (20th century)