Security Market Line

Posted in Finance, Accounting and Economics Terms, Total Reads: 1798

Definition: Security Market Line

Security market line is a graph that is plotted between systematic risk/market risk and return of the whole market given a particular time.

Security market line helps to determine whether a particular security when added to portfolio will help in increase the expected return of the portfolio. If a particular security lies above the security market line then the security is considered undervalued.

On the other hand if a security lies below the Security market line then it is considered as overvalued.

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