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Definition of underlying - 7 dictionary results

un⋅der⋅ly⋅ing

  [uhn-der-lahy-ing]
Use underlying in a Sentence
–adjective
1. lying or situated beneath, as a substratum.
2. fundamental; basic: the underlying cause of their discontent.
3. implicit; discoverable only by close scrutiny or analysis: an underlying seriousness in his witticisms.
4. (of a claim, mortgage, etc.) taking precedence; anterior; prior.
5. Linguistics. belonging to an earlier stage in the transformational derivation of a sentence or other structure; belonging to the deep structure.
Origin:
1605–15; underlie + -ing 2

un⋅der⋅lie

  [uhn-der-lahy]
–verb (used with object) -lay, -lain, -ly⋅ing.
1. to lie under or beneath; be situated under.
2. to be at the basis of; form the foundation of.
3. Grammar. to function as the root morpheme or original or basic form of (a derived form): The form “boy” underlies “boyish.”
4. Finance. to be primary to another right or security.
Origin:
bef. 900; ME underlyen (v.), OE underlicgan. See under-, lie 2
Dictionary.com Unabridged
Based on the Random House Dictionary, © Random House, Inc. 2009.
Cite This Source Link To underlying
un·der·lie   (ŭn'dər-lī')   
tr.v.   un·der·lay (-lā'), un·der·lain (-lān'), un·der·ly·ing, un·der·lies

  1. To be located under or below.

  2. To be the support or basis of; account for: Many factors underlie my decision.

  3. To constitute a prior financial claim over: Dividends for preferred stock underlie those of common stock.

un·der·ly·ing   (ŭn'dər-lī'ĭng)   
adj.  

  1. Lying under or beneath something: underlying strata.

  2. Basic; fundamental.

  3. Present but not obvious; implicit: an underlying meaning.

  4. Taking precedence; prior: an underlying financial claim.

The American Heritage® Dictionary of the English Language, Fourth Edition
Copyright © 2009 by Houghton Mifflin Company.
Published by Houghton Mifflin Company. All rights reserved.
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Word Origin & History

underlie 
O.E. under licgan "to be subordinate to, to submit to;" see under + lie (v.2). Meaning "to lie under or beneath" is attested from 1600; fig. sense of "to be the basis of" is attested from 1852 (implied in underlying).
Online Etymology Dictionary, © 2001 Douglas Harper
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Financial Dictionary

Underlying

1. In derivatives, the security that must be delivered when a derivative contract, such as a put or call option, is exercised.

2. In equities, the common stock that must be delivered when a warrant is exercised, or when a convertible bond or convertible preferred share is converted to common stock.

Investopedia Commentary

The price of the underlying is the main factor that determines prices of derivative securities, warrants and convertibles. Thus, a change in an underlying results in a simultaneous change in the price of the derivative asset that is linked to it. In most cases, the underlying is a security such as a stock (in the case of options) or a commodity (in the case of futures).

Related Links

Futures Fundamentals
What Are Warrants?
Convertible Bonds: An Introduction
Options Basics Tutorial

See also: Call Option, Conversion Price, Convertible Bond, Convertible Preferred Stock, Derivative, In the Money, Option, Put Option, Strike Price, Warrant

Investopedia.com. Copyright © 1999-2005 - All rights reserved. Owned and Operated by Investopedia Inc.
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Medical Dictionary

Main Entry: un·der·ly·ing
Pronunciation: -"lI-i[ng]
Function: adjective
: serving as a basis or cause (as of secondary symptoms) underlying brain malformation that caused the hydrocephalus —R. M. Henig>
Merriam-Webster's Medical Dictionary, © 2002 Merriam-Webster, Inc.
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