Which of the following statements are correct?

1.The SML approach is dependent upon a reliable measure of a firm's unsystematic risk.

2.The SML approach can be applied to firms that retian all of their earnings.

3.The SML approach assumes a firm's future risks are similar to its past risks.

4.The SML approach assumes the reward-to-risk ratio is constant.

A. 1 and 2 only

B.2 and 4 only

C.3and 4 only

D. 2,3, and 4 only

I also need the reasons :)