Security Market Line

[drhall]

Gem of example and explanation of what is often a complex and unnecessary mystery in finance classes! Bravo!!

[solomon]

2:03 on the SML graph. shouldn't the horizontal axis be labelled beta of i instead of beta of the market. since SML is a measure of a single security?

[aadamjawad]

why does it say at 0:34 that sml also includes individual securities or portfolios - so are the 2 the exact same except one as SD on x axis and other has beta ?

[santybest]

If an asset is priced above the SML, and thus undervalued, it should be bought? and If it is priced below the SML, and thus overvalued, it should be sold? Right?

[n.subramanian]

Really really amazing work, thank you

[PankajSingh]

Fantastic explanation by u. Other are creating the hell outof this complex topic. I will recommend only your videos to my cfa pursuing friend's. 😅👍👍☺

[Heaven-mgpv]

Sir stocks that are undervalued giving higher return relative to the risk i’m gonna take, so my question is if i m getting higher return while taking a lower level of risk isn’t is good for me? Then why this particular security is considered to be undervalued & why i should not invest in it?

[immerfestedruff]

Hi, at 6:11: Where do I get these 12%of asset A from? Did you assumed them, or can they be calculated in any way out of the former terms?

[Covid-wjkm]

Thanks for the precise and concise video.

[traceyn.]

Such a excellent video- you explain the security market line so well...Thank you!!

[richardgordon]

Thanks for an incredibly well explained video!

[battlegroundmaster]

thank you for the great lectureSML  pass on the Tbill and S&P500 when we  draw it on the graph since Tbill's beta is 0 and S&P500's beta is 1? or we have to choose the line passing on many portfolio most on the scattered graph?

[KcoolKidd]

Why does prices and returns move in opposite directions? I understand that if an asset's expected return is above the SML, it is undervalued. But, investors will buy up this asset and the price will increase and the expected return will then decrease; thus bringing the asset's return to the level of the security market line.

Why does the expected return decrease though? After spending some time thinking about it, I came up with the following: Expected Return = Dividend Yield + Capital Gains yield. If the price increases, the dividend yield will decrease because the bottom of the fraction gets larger; thus decreasing the yield. However, the capital gains yield will also increase because you are receiving capital gains because the price went up. Therefore, the capital gains nullifies the the decreased yield. The return then does not actually decrease. So my thinking does not make sense.

Can anyone help?

[greensong]

This video helps me a lot thank you Ronald!

[brendaj]

This video is extremely helpful. Excellent explanation!

[abdo-eheg]

What's means that the slope of SML is negative?

[jithinjoykochumalayil]

are we comparing the expected rate of return calculated under capm Vs actual return to determine whether the security is under priced or over priced. some defined it as difference between estimate returns and expected return under capm

[ИринаПросвирякова-ип]

Very very very helpful!!! Thank you so much!!!

[AnnaHaTexas]

I is a beautiful sharing. I finally got it

[Jordan-mduc]

Why wouldn't you want to buy an undervalued asset/portfolio? Your return is higher than expected for the given amount of risk, wouldn't this make it more attractive to investors? Any help/explanation would be appreciated - Confused university student