A stock price is currently $60. Over each of the next two six-month periods, it is expected to go up by 6% or down by 6%. The risk-free interest rate is 5% per year with semi-annual compounding. Part I : Use the two-step binomial tree model to calculate the value of a one-year European put option with an exercise price of $61. Part II : Discuss how you can hedge risk when you initially write the put option? Part III : Assume six months have passed, discuss how you can hedge risk when you realize that the stock price is $63.6?