Business and Personal Finance Dictionary

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• UNDERLYING INVESTMENT
  
  An underlying investment is a security (such as a stock) or other type of financial product (such as a stock index or futures contract) whose value determines the value of a related investment. For example, if you own a stock option, the stock you have the right to buy or sell with that option is the option's underlying investment. Similarly, the investments a mutual fund makes are considered the fund's underlying investments, since the net asset value (NAV) of the fund is based on the combined values of all of the investments the fund owns.
  
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