About Security Market Line (SML)

CFA Level I Portfolio Management
#1

Why a stock in the area above SML line meaning undervalued, and under SML line meaning overvalued?

#2

Above the SML it earns too high a return for a given level of systematic risk, so it is underpriced.

Below the SML it earns too low a return for a given level of systematic risk, so it is overpriced.