The payoffs to debtholders and shareholders are said to mimic the payoffs option-style securities. With this in mind answer the following questions:

For a leveraged firm with debt of $100m that is due in 1 year draw the payoff diagram for shareholders.

Does the payoff to shareholders incorporate the payoff to a call option or a put option and is the position long (a bought option) or short (an option that is sold)?

For the same firm draw the payoff diagram for debtholders.

Does the payoff to debtholders incorporate the payoff to a call option or a put option and is the position long (a bought option) or short (an option that is sold)?

Draw the payoff diagram for the combined position for both shareholders and debtholders and briefly describe what it illustrates.