I would like to know the answer by step by step. and detail explanation

QUESTION 3 (25 marks) (A) Short selling is restricted in Malaysia and it is only allowed to specific stocks investors who are bearish on the market may not take advantage on the bearish market movement. This is possible, however, using the replication strategy Given the following information, outline how an investor can use stock options to replicate a short stock position Options Price A RM7 June Call option RM1.00 A RM7 June Put optionRM1.20 Stock Price Call Intrinsic Put (RM) Intrinsic Net Profit Premium value of Premium value of Put Call 5.50 6.00 6.50 7.00 7.50 8.00 8.50 Also support your answer with a payoff diagram. [Label the break-even point]. (15 marks) (B) (i) Explain why higher interest rates lead to higher call options price but lower put options values. (5 marks) (ii)Explain the advantages and disadvantages of writing a straddle than a strangle given that an investor thinks that the stock price will tend to be remained stable (5 marks) over the next few months. Continued