An investor believes that the Cisco stock price is going to increase in the following 12 months from the current stock price of $200. Call options on Cisco stock expiring in 12 months have a strike price of $224 and sell at a premium of $20 each. The investor has $9,000 to invest, and is considering 3 alternatives:

1. Purchase 450 call options.
2. Purchase 45 shares.
3. Invest $8,100 in a money market fund returning 9% per year and buy 45 call options with the remaining money.

Assume that the stock price will be $244 per share after 12 months.

Part 1:What will be the investor's rate of return for alternative 1?

Part 2: What will be the investor's rate of return for alternative 2?

Part 3: What will be the investor's rate of return for alternative 3?