Question: From the following equation for expected returns, explain what may cause stock prices to decrease in economic recessions: E(r) risk-free rate = A*Var(r) A is

From the following equation for expected returns, explain what may cause stock prices to decrease in economic recessions:

E(r) risk-free rate = A*Var(r)

A is the risk aversion for the average investor, and Var(r) is the variance of the market portfolio. Assume that investor risk aversion is constant.

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