Consider European and American call options on a non-dividend-paying stock where the stock price is $40, the strike price is $40, the risk-free rate is 4% per annum, the volatility is 30% per annum, and the time to maturity is six months. a. Calculate u, d, and pfor a two step tree

b. Value each of the options using a two-step tree.

I am having trouble understanding the trees and how to calculate the different prices within the trees.