1. Graph the payoff diagram for the following straddle: one long call option with a strike price of $50 and one long put option with a strike price of $60.
2. List and describe the simple no-arbitrage relationships, preferably both in words and in algebra.
3. How would you cook up a numerical example in which you would want to exercise anAmerican put before expiration? Is your American put in-the-money or out-of-the-money?