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underlying
adj.
lying beneath, forming the foundation of; fundamental, basic; implicit; prior
underlie
v.
place underneath; lie under; provide something that supports from below
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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.For example, in a stock option to buy 100 shares of Nokia at EUR 50 in September 2006, the underlying is a Nokia share. In a futures contract to buy EUR 10 million 10 year German Government Bonds, the underlying are the German Government bonds. Other examples are stock market indices such as the Dow Jones Industrial Average and Nikkei 225.
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| Webster's Revised Unabridged Dictionary (1913) | Download this dictionary |
Underlying
(a.)
Lying under or beneath; hence, fundamental; as, the underlying strata of a locality; underlying principles.
Lying under or beneath; hence, fundamental; as, the underlying strata of a locality; underlying principles.
Webster's Revised Unabridged Dictionary (1913), edited by Noah Porter. About
| Campbell R. Harvey's Hypertextual Finance Dictionary | Download this dictionary |
Underlying
| WordNet 2.0 Dictionary | Download this dictionary |
underlying
Adjective
1. in the nature of something though not readily apparent; "shortcomings inherent in our approach"; "an underlying meaning"
(synonym) implicit in(p), inherent
(similar) implicit, inexplicit
2. located beneath or below
(similar) subjacent
3. being or involving basic facts or principles; "the fundamental laws of the universe"; "a fundamental incompatibility between them"; "these rudimentary truths"; "underlying principles"
(synonym) fundamental, rudimentary
(similar) basic
1. in the nature of something though not readily apparent; "shortcomings inherent in our approach"; "an underlying meaning"
(synonym) implicit in(p), inherent
(similar) implicit, inexplicit
2. located beneath or below
(similar) subjacent
3. being or involving basic facts or principles; "the fundamental laws of the universe"; "a fundamental incompatibility between them"; "these rudimentary truths"; "underlying principles"
(synonym) fundamental, rudimentary
(similar) basic
underlie
Verb
1. be or form the base for
(hypernym) be
2. lie underneath
(hypernym) lie
1. be or form the base for
(hypernym) be
2. lie underneath
(hypernym) lie