Question: - Why do options typically sell at prices higher than their exercise values? - Which of the following events are likely to increase the market

- Why do options typically sell at prices higher than their exercise values?

- Which of the following events are likely to increase the market value of a call option on a common stock? Explain.

a. An increase in the stocks price

b. An increase in the volatility of the stock price

c. An increase in the risk-free rate

d. A decrease in the time until the option expires

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