A call option has a strike price of X = $100 and a time to expiration of 9 months. The risk free rate is r = 2.5% and the volatility is sigma = .15. If S = 102.50, the price of a call option is $7.66. If the volatility is increased to sigma = 0.25,

1. The call option value will decrease
2. The intrinsic value is unchanged
3. The time premium will increase

Which option is correct?

a. 1 & 2 only

b. 2 & 3 only

c. 1, 2, & 3

d. 3 only

e. 1 only