You are recalculating the risk of ACE stock in relation to the market index and you find the ratio of the systematic variance to the total variance has risen.You must also find that the ____________.
A) covariance between ACE and the market has fallen
B) correlation coefficient between ACE and the market has fallen
C) correlation coefficient between ACE and the market has risen
D) unsystematic risk of ACE has risen

Question

Quizplus · Accepted Answer

The ratio of systematic variance to total variance is related to the correlation coefficient. If this ratio has risen, it indicates that the systematic risk (market-related risk) has increased relative to the total risk, implying that the correlation coefficient between ACE and the market has risen.

You Are Recalculating the Risk of ACE Stock in Relation