Differentiate Between Automatic Processing and Controlled Processing

question 25

Essay

Differentiate between automatic processing and controlled processing. Then provide an example from your own life of how a controlled process became an automatic process.

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Definitions:

Underlying Security

The asset upon which a derivative contract, such as an option, is based.

Option

A financial derivative that represents a contract giving the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified strike price on or before a specified date.

Employee Stock Options

A right, purchased from one party by another, granting the purchaser the option, but not the requirement, to either buy (call) or sell (put) a share at a pre-decided price during a specific timeframe or on a certain date.