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A stock is currently trading at $62. After one year, its price will be either $42...

A stock is currently trading at $62. After one year, its price will be either $42 or $85. A European derivative will mature after one year. At that time, it will pay $8 if the stock price at that time is $42 and $14 if the stock price at that is $85. The risk-free rate is 8% per annum compounded annually (not continuously compounded). What is the price of the derivative?

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