Which of the following statements is true regarding the binomial model method of option pricing and the Black-Scholes-Merton model for option pricing?

You must identify all statements that are correct.

Select one:

a. The Binomial approach makes assumptions about share price movements that are more realistic than the assumptions underlying the Black Scholes-Merton model.

b. The Black-Scholes-Merton model only works for options written on stocks that do not pay dividends, but the binomial model can be adjusted for stocks that pay dividends.

c. The binomial model can be used to price American style put options but the Black-Scholes-Merton model cannot price American-style put options.

d. For European options, as the step size gets smaller and smaller the binomial model option price will converge to the Black-Scholes-Merton price.

e. Both a. and b. are correct.

f. Both a. and c. are correct.

g. Both c. and d. are correct.

h. All of a., b. and c. and d. are correct