i am so confused

(30 points) Consider a two-period financial market with t=0,1,2 and two assets St=(Bt,St) - risk-free bond, B, with B0=1 and Bt=(1+r)t,r=1 - risky asset, S=(St)t=0,1,2, with S0=1 and possible returns a=0.5 and b=1.5 (a) Draw a binomial tree for the possible values of (St)t=0,1,2 and state p. (b) Price the European put option at each time t=0,1,2, by finding v(t,St)= t(C), whose payoff at time t=2 is C=(KS2)+with K=5/4. (c) Hedge the above put option by finding the hedging strategy t=(t(0),t(1)) for t=1,2. (30 points) Consider a two-period financial market with t=0,1,2 and two assets St=(Bt,St) - risk-free bond, B, with B0=1 and Bt=(1+r)t,r=1 - risky asset, S=(St)t=0,1,2, with S0=1 and possible returns a=0.5 and b=1.5 (a) Draw a binomial tree for the possible values of (St)t=0,1,2 and state p. (b) Price the European put option at each time t=0,1,2, by finding v(t,St)= t(C), whose payoff at time t=2 is C=(KS2)+with K=5/4. (c) Hedge the above put option by finding the hedging strategy t=(t(0),t(1)) for t=1,2