Which of the following is a way of extending the Black-Scholes-Merton formula to value a European call option on a stock paying a single dividend? Circle the correct answer and briefly explain your choice.

(a) Reduce the maturity of the option so that it equals the time of the dividend

(b) Subtract the dividend from the stock price

(c) Add the dividend to the stock price

(d) Subtract the present value of the dividend from the stock price