1. What statement is correct about the relation between the Black-Scholes (BS) model and Merton's model in estimating European option prices a. The option prices calculated from the BS model and Merton's model will always be different whether or not the underlying stock pays dividend. b. Compared to the BS model, the only additional contribution of the Merton's model is that it explicitly accounts for the dividend payments of a stock in estimating the option prices c. If a stock does not pay any dividends, then the stock option prices estimated from the Merton's model will be exactly the same as those from the BS model assume same stock, exercise price, and expiration date) d. The Merton's model can be used to estimate option prices for both dividend and non-dividend paying stocks, while the BS model can be used to estimated option prices for non-dividend paying stocks. e. Statements b, c and d are correct