Question $1-10$ points

Payoff diagrams!

a$.$ Draw the payoff diagram for a short position in a put option with a strike of $x_1$ and a long position in a call option with a strike of $x_2.(2$ points$)$

b$.$ Consider the following payoff diagram. Create a portfolio that replicates this payoff structure using only a risk$-$free bond and call options of any strike $($you may long and$/$or short$).(8$ points$)$

$2$