Joseph Adams must diagram the security market line (SML) in order to determine if several assets he is considering adding to his portfolio are fairly priced. Adams observes that the risk-free rate currently available in the market is 4.2 percent. Adams has also calculated the required return on the market portfolio to be 13.5 percent. Which of the following statements is FALSE（）
A. The SML must be graphed using the standard deviation of the market portfolio.
B. Securities plotting above the SML are undervalued.
C. The intercept of the SML in this case is equal to 4.2%.
参考答案：A
解析：
The SML uses either the covariance between assets and the market or beta as the measure of risk. Beta is the covariance of a stock with the market divided by the variance of the market; the other answers are correct statements.