underlyingˈʌn dərˌlaɪ ɪŋ
underlie (v)
- present
- underlies
- past
- underlay
- past participle
- underlain
- present participle
- underlying
underlying
English Definitions:
implicit in(p), inherent, underlying (adj)
in the nature of something though not readily apparent
"shortcomings inherent in our approach"; "an underlying meaning"
underlying (adj)
located beneath or below
fundamental, rudimentary, underlying (adj)
being or involving basic facts or principles
"the fundamental laws of the universe"; "a fundamental incomatibility between them"; "these rudimentary truths"; "underlying principles"
underlying (Adjective)
lying underneath
underlying (Adjective)
basic or fundamental
underlying (Adjective)
implicit
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 derivative depend on the value of this underlying. There must be an independent way to observe this value to avoid conflicts of interest. According to the Financial Accounting Standards Board's FASB Statement of Financial Accounting Standards No. 133 - Accounting for Derivative Instruments and Hedging Activities, an underlying is a specified interest rate, security price, commodity price, foreign exchange rate, index of prices or rates, or other variable. An underlying may be a price or rate of an asset or liability but is not the asset or liability itself.
Underlying
In finance, a derivative is a contract that derives its value from the performance of an underlying entity. This underlying entity can be an asset, index, or interest rate, and is often simply called the "underlying". Derivatives can be used for a number of purposes, including insuring against price movements (hedging), increasing exposure to price movements for speculation, or getting access to otherwise hard-to-trade assets or markets.Some of the more common derivatives include forwards, futures, options, swaps, and variations of these such as synthetic collateralized debt obligations and credit default swaps. Most derivatives are traded over-the-counter (off-exchange) or on an exchange such as the Chicago Mercantile Exchange, while most insurance contracts have developed into a separate industry. In the United States, after the financial crisis of 2007–2009, there has been increased pressure to move derivatives to trade on exchanges. Derivatives are one of the three main categories of financial instruments, the other two being equity (i.e., stocks or shares) and debt (i.e., bonds and mortgages). The oldest example of a derivative in history, attested to by Aristotle, is thought to be a contract transaction of olives, entered into by ancient Greek philosopher Thales, who made a profit in the exchange. However, Aristotle did not define this arrangement as a derivative but as a monopoly. (see Aristotle's Politics, Book I, Chapter XI). Bucket shops, outlawed in 1936, are a more recent historical example.
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"underlying." Kamus.net. STANDS4 LLC, 2024. Web. 28 Mar. 2024. <https://www.kamus.net/english/underlying>.
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