Total points: 40 Question I (20 points) Suppose that put options on a stock with strike prices $25 and 5 month maturity costs $3. Suppose the current stock price is $24. (a) How can those securities be used to create a protective put? (b) What is the initial investment? (c) Construct a table showing how the payoff and profit varies with Sr in 5 month, for the protective put you created. Whenever you need to refer to stock price on expiration date, use Sr. The only notation that should show up in the table should be St. The table should look like this: Payoff Profit Stock Price Sr 25 S > 25 Question II (20 points) A call option on a stock with a strike price of $60 costs $8. A put option on the same stock with the same strike price costs $6. They both expire in 1 year (a) How can these two options be used to create a straddle? (b) What is the initial investment? (c) Construct a table showing how the payoff and profit varies with Sr in 1 year, for the straddle that you constructed. Whenever you need to refer to stock price on expiration date, use Sr. The only notation that should show up in the table should be Sr. The table should look like this: Payoff Profit Stock Price Sr S60 SO Assignment 7.pdf