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Posted on Jun 06, 2024

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?

A. Subtract the dividend from the stock price

B. Add the dividend to the stock

C. Subtract the present value of the dividend from the stock price

D. Reduce the maturity of the option so that it equals the time of the dividend

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