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3) Investors have utility U-Expected income - 18* Variance of income. Stock in the Family Clothesline (FC) has return F + , ~N(0, .017). X shares of stock are outstanding. Investors can either invest in the FC, or the riskless asset (money) A) There are 100 investors available. Each believes (rationally) that F-1. Graph the price of the Family Clothesline Stock as X goes from 10 to 110 Now assume that of the 100, 75 still believe that F-1. But 25 believe that F-1.95. B) Graph on the same graph as above the price of FC as X goes from 10 to 110, assuming investors have the opportunity to go short. C) Now assume that investors do not have the opportunity to go short. Graph on the same graph as above the price of FC as X goes from 10 to 110. 3) Investors have utility U-Expected income - 18* Variance of income. Stock in the Family Clothesline (FC) has return F + , ~N(0, .017). X shares of stock are outstanding. Investors can either invest in the FC, or the riskless asset (money) A) There are 100 investors available. Each believes (rationally) that F-1. Graph the price of the Family Clothesline Stock as X goes from 10 to 110 Now assume that of the 100, 75 still believe that F-1. But 25 believe that F-1.95. B) Graph on the same graph as above the price of FC as X goes from 10 to 110, assuming investors have the opportunity to go short. C) Now assume that investors do not have the opportunity to go short. Graph on the same graph as above the price of FC as X goes from 10 to 110

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