Discussion Question 1 - CLO 1, CLO 6, CLO 7 Please answer the following questions in detail, provide examples whenever applicable, provide in-text citations. Discuss the risks and payoffs of the following positions, accompanied by payoff graphs. Buy stock and a put option on the stock. Buy a stock. Buy a call. Buy stock and sell a call option on the stock (covered call). Buy a bond. Buy stock, buy a put, and sell a call. Sell a put (naked put). 2. What is put–call parity and why does it hold? Could you apply the parity formula to a call and put options with different exercise prices?  3. Over the coming year, Ragwort’s stock price might drop from $100 to $50 or it might rise to $200. The one-year interest rate is 10%.  What is the delta of a one-year call option on Ragwort stock with an exercise price of $100?  Use the replicating-portfolio method to value this call.  In a risk-neutral world, what is the probability that Ragwort stock will rise in price?  Use the risk-neutral method to check your valuation of the Ragwort option.  If someone told you that in reality there is a 60% chance that Ragwort’s stock price will rise to $200, would you change your view about the value of the option? Explain.  Idetailed answers for each questions.NTEXT CITAION WITH REFERENCES.