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Underlying - Definition and Overview |
| Related Words: Basic, Bottom, Cardinal, Constituent, Constitutive, Covert, Critical, Cryptic, Elemental, Elementary, Esoteric, Essential, Fundamental, Gut, Latent, Lurking, Material |
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In finance, an underlying is an investment from which a derivative security is derived. Underlyings are invariably more common and more widely heard of than the securities derived from them. However the total market value of a derivative market may exceed the market of the underlying on which it is based.
For example in the case of a call option on a stock, the stock is the underlying and the option is the derivative.
In the case of an option on a bond, the bond is the underlying.
Stock indexes such as the Dow Jones Industrial Average or Nikkei 225, interest rates such as a LIBOR or credit ratings can also be underlyings of particular securities.
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Example Usage of Underlying |
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softmodeling: RT @JBezivin: RT @xwarzee: Oslo transforms into the Underlying application model of the cloud http://bit.ly/4CU7En #sqlmodeling #oslo |
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JCNL3: @daniangelique haha good one.... Jus tryna prove u wrong since its the Underlying tone in our friendship |
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vinisan: eu dou um doce para a primeira pessoa que conseguir arrumar uma tradução para o português para "Underlying" |
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