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1. Discuss the empirical evidence that suggests that the Black-Scholes-Merton model is rejected for S&P 500 index options. Provide at least three different stylized empirical
1. Discuss the empirical evidence that suggests that the Black-Scholes-Merton model is rejected for S&P 500 index options. Provide at least three different stylized empirical facts from the option market to support your answer. Despite being rejected by the data, why is the model still being used extensively in the finance industry? Provide references for any sources you use.
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