Finally, let's think about how some of these pieces fit together. The investing world is not static $-$ risk changes. Rates change. Equilibrium thinking can help us$,$ though. One way to think about the equilibrium in financial markets $-$ all assets need to be owned by someone.

What do you think would happen to the equilibrium expected return on stocks if investors perceived higher volatility in the equity market?

Take a look at Equation $6\mathrm{.}7$ in the text. Let's assume that investors in aggregate have some risk aversion given by A $($e$.$g$.$ A $=3).$ Something to consider $-$ can all investors at the same time decide to sell stocks?