Glossary
Please click the terms to see the explanation.Source: Deutsche Börse AG
Underlying instrument
Both commodities and financial instruments (shares, bonds, currencies,
indices, etc.) can underlie derivatives contracts.
Some underlying instruments, such as commodities, shares, bonds, or currencies, can be physically delivered, while others - so-called notional underlying instruments - cannot. Notional underlying instruments are standardized and assigned certain attributes so that they can serve as benchmarks. For example, the Bund future is a contract on a notional instrument which represents a classic Federal Government Bond, with an interest rate of six percent and a maturity of ten years. Indices are another type of notional underlying instrument. An option on DAX® is a contract on the stock portfolio which represents the DAX® shares with their relative weightings.
Underweight
Some underlying instruments, such as commodities, shares, bonds, or currencies, can be physically delivered, while others - so-called notional underlying instruments - cannot. Notional underlying instruments are standardized and assigned certain attributes so that they can serve as benchmarks. For example, the Bund future is a contract on a notional instrument which represents a classic Federal Government Bond, with an interest rate of six percent and a maturity of ten years. Indices are another type of notional underlying instrument. An option on DAX® is a contract on the stock portfolio which represents the DAX® shares with their relative weightings.
Market participants speak of underweighting when buying or selling a
particular type of investment (e.g. shares, bonds and warrants), a region or
sector, ultimately changing the weighting of their depot. This weighting is
usually stated in percent. The additional purchase of securities lends the
respective type a stronger weight in the portfolio.
Analysts often use these terms to express their recommendations to either buy (overweight) or sell (underweight) shares.
Underwriting bank
Analysts often use these terms to express their recommendations to either buy (overweight) or sell (underweight) shares.
A company that lists on the exchange can enlist the help of an IPO underwriter. It overtakes project management and organizes numerous tasks that have to be completed prior to an IPO. These include the creation of a time plan or getting in touch with analysts. An IPO underwriter represents solely the interests of the IPO candidate.