Investors have utility U=Expected income 27* Variance of income. Stock in the Family Clothesline (FC) has return F + , ~N(0, .022). X shares of stock are outstanding. Investors can either invest in the FC, or the riskless asset (money).

A) There are 120 investors available. Each believes (rationally) that F=1. Graph the price of the Family Clothesline Stock as X goes from 10 to 160. Now assume that of the 120, 90 still believe that F=1. But 30 believe that F=2.0.

B) Graph the price of FC as X goes from 10 to 160, assuming investors have the opportunity to go short.

C) Graph the price of FC as X goes from 10 to 160, assuming that investors are not able to go short.

All three lines should be on the same graph.