单选题 Which statement is most correct about the Security Market Line (SML)?

A. The SML is a theoretical, long run relationship and therefore never changes.
B. The SML will get a steeper slope if inflation is expected to decrease, reflecting the fact that riskier investments benefit most from reductions in inflation.
C. The SML will get a steeper slope if investors become more risk-averse, indicating that investors will demand a higher risk premium when their risk aversion increases.

【正确答案】 C

【答案解析】The level of the SML will change in response to factors that affect all returns equally, such as changes in expected inflation, i. e. higher inflation expectations will shift the line up. The slope will change in response to changes in risk premium, which can be due to actual changes in the level of systematic risk( which is not common), or to changes in risk aversion that will affect how much compensation investors demand for the risk in the market.