Question 3 (a) Detail the possible causes of a deficit in a Defined Benefit (DB) pension plan and explain why a Defined Contribution (DC) pension plan cannot have a deficit (20 marks) (b) Explain how a firm might use stock options in order to incentivise a manager to work in the shareholders' best interests. (10 marks) (c) Using an example explain what a 'real option' is. (10 marks) (d) Explain what is involved in valuing a merger using the comparative firms' approach. (10 marks) (Total 50 marks)