Regular language and Finite Automata (FA).

Question

Consider the following FA

1. Build a transition graph with only two states that accepts the same language as the FA.
2. Build a FA which accepts the same language as the FA, but has fewer states.

So far I have the following as my answers:
1.

2. I don't know how to do 2. but I watched this YouTube tutorial. I'm not sure how to apply that logic here.

Is my first answer correct and what is the answer to the second one?
Thank you.