Which of the Following Is a FALSE Statement About the Security

Multiple Choice

Which of the following is a FALSE statement about the security market line (SML) ?

A) It is upward sloping, which indicates that investors require a higher expected return on riskier securities.
B) It represents the trade off between total risk and the required rate of return for any risky security.
C) It indicates that the size of the risk premium varies directly with a security's market risk, as measured by beta.
D) It implies that securities with betas less than the market beta of 1.0 are less risky than the "average" stock and will therefore have lower required rates of return.