1. a)A portfolio contains 1 call option with strike 50, 1 call option with strike 70, and 2 put options with strike 60. All options are on the same stock, and all expire at the same time. Calculate the porfolio's minimum payoffs at expiration.

Also could you draw a payoff diagram when solving.

1. b)Consider a one-period binomial model with h = 1, S = 100, r = 0.08, u = 1.5, d = 0.8 and = 0. Calculate the price of an American call option on this stock with strike price K = 130. Does early exercise occur? What is the price?