"Security Market Line (SML): SML estimates the return of a single security relative to its exposure to systematic risk. It helps to find out that whether the expected return on the securities is better than the risk which he is taking. The Security Market Line (SML): Implication of SML for determining the Expected Rate of Return for a Risky Asset • In equilibrium, all assets and all portfolios of assets should plot on the SML • Any security with an estimated return that plots above the SML is underpriced • Any security with an estimated return that plots below the SML is overpriced. Source: http://in.docsity.com/en-docs/Capital_Market_Theory_-_Security_Analysis_and_Portfolio_Management_-_Solved_Quiz_"
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