A market risk manager is tasked with calculating the price of a 2-year zero-coupon bond. Here are the details needed for the calculation:

• The current 1-year interest rate is 10.0%.
• There is a 50% probability that the 1-year interest rate will either rise to 12.0% or fall to 8.0% after one year.
• The bond carries a risk premium of 50 basis points per year for duration risk.
• The bond has a face value of EUR 1,000.

With this information, how should the manager calculate the price of the bond?