1) Plot the payoffs, as a function of the stock price on the terminal date, for the following derivative securities: a. Acalloption onashare of Microsoftstrike a55: the payoffismax(5,-55,0). b. Aput option on a share of Microsoft strike at 40: the payoff is max(40-5,0). C. A digital call option on Microsoft: the option pays out $1 if Microsoft finishes above thestrike (say, $55) and zero otherwise. Compare the payoff of the digital call to the "plain vanilla" call in part A. d. Astraddle" portfolio of options: a straddle is a portfolio that is long a call and a put option on the same stock strike at the same level. Assume the strike for the call and put is $55. e. A"butterfly" portfolioof options: Buyacallstrike at $40, sell2 callsstrike at $50 and buying a $60call. 1) Plot the payoffs, as a function of the stock price on the terminal date, for the following derivative securities: a. Acalloption onashare of Microsoftstrike a55: the payoffismax(5,-55,0). b. Aput option on a share of Microsoft strike at 40: the payoff is max(40-5,0). C. A digital call option on Microsoft: the option pays out $1 if Microsoft finishes above thestrike (say, $55) and zero otherwise. Compare the payoff of the digital call to the "plain vanilla" call in part A. d. Astraddle" portfolio of options: a straddle is a portfolio that is long a call and a put option on the same stock strike at the same level. Assume the strike for the call and put is $55. e. A"butterfly" portfolioof options: Buyacallstrike at $40, sell2 callsstrike at $50 and buying a $60call