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Compute the price of the transukraine pipeline

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Investors have utility U=Expected income - 10* Variance of income. Stock in the TransUkraine Pipeline Company has return F + ε, ε~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.

Reference no: EM132200277

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