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Investors have utility U=Expected income - 10* Variance of income.Stock in the TransUkraine Pipeline Company has return F + , ~N(0,0 .16), where 0.16 is
Investors have utility U=Expected income - 10* Variance of income.Stock in the TransUkraine Pipeline Company has return F + , ~N(0,0 .16), where 0.16 is the variance in dollars squared.X shares of stock are outstanding.Investors can either invest in the TransUkraine Pipeline Company, or the riskless asset (money).There are 500 investors available.Each believes (rationally) that F=1.Compute the price of the TransUkraine Pipeline Company stock for X = 100.
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