a = = = Consider a two-period binomial market model (St)t=0,1,2 with two return rates a = 0, b = 1 and So = 1, and with the riskless account At = (1+r){ where p = 0.5. Price and hedge the vanilla option whose payoff C at time 2 is given by 3 if S2 = 4, = C = 1 if S2 = 2, 3 if S2 = 1. = a = = = Consider a two-period binomial market model (St)t=0,1,2 with two return rates a = 0, b = 1 and So = 1, and with the riskless account At = (1+r){ where p = 0.5. Price and hedge the vanilla option whose payoff C at time 2 is given by 3 if S2 = 4, = C = 1 if S2 = 2, 3 if S2 = 1. =