Hi, I am having troubles with this financial mathematics question, could someone please give me the step by step solutions? Thank you.

1. [10 marks] Elementary market model. Consider a single-period two-state market model M = (B, S) on a sample space ? = {w1, w2 } with P(w1) = p E (0, 1). We assume that T = 1, So > 0 and 0 0. Show that the price Po admits the following representation Po = K(1+r) 'P(S1 0. (e) Take a strike K such that Sod