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)
“Every age develops its own peculiar forms of pathology, which express in exaggerated form its underlying character structure.”
—Christopher Lasch (b. 1932)
“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)