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The underlying instrument is the financial instrument upon which a derivative security's price is based.

In the financial world, it is possible to trade in one financial instrument whose value is defined in terms of the price of some other financial instrument (the 'underlying' instrument).

Stock options are a common example. Finance

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Underlying instrumentThe underlying instrument is the financial instrument upon which a derivative security's price is based. In the financial world, it is possible to trade in one financial instrument whose value is defined in terms of the price of some other financial instr

UnderlyingIn 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

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