Underlying Asset
An Underlying Asset is an asset (such as stock, bonds, or commodities) that gives value to a financial instrument, such as a derivative or convertible note in startup financing.
Benefits
An underlying asset backs the value of financial instruments, increasing investment security.
Frequently Asked Questions
What is the underlying asset?
The underlying asset is the financial instrument, like stocks or bonds, that gives value to a derivative or financial product.
What is the underlying asset in forex?
The underlying asset in forex is the currency pair being traded, such as EUR/USD, where the value of one currency is exchanged for another.
What is an underlying in a derivative?
The underlying in a derivative is the asset, like a stock, bond, or commodity, that the derivative’s value depends on.
Key Takeaway
An underlying asset adds value to financial instruments, enhancing investment security.