Security Market Line financial definition of Security Market Line. Security Market Line finance term by the Free Online Dictionary.

Security market line

Line representing the relationship between expected return and market risk or beta. The slope of this line is the risk premium for beta.

Security Market Line

The linear relationship between expected asset returns and betas posited by the Capital Asset Pricing Model.

Security Market Line

In Markowitz Portfolio Theory, a line on a chart representing the capital asset pricing model. The security market line plots risk versus expected return of the market. The security market line is a useful tool in determining whether a given security is undervalued and/or a market outperform. If a security plots the security market line, it indicates a higher expected return for a given level of risk than the market as a whole.

security market line

A line used to illustrate the relationship between risk and return for individual securities. The security market line shows a positive linear relationship between returns and systematic risk as measured by beta.

Security Market Line (SML)

What Does Security Market Line (SML) Mean?

A line that graphs the systematic or market risk versus the return of the whole market at a certain point in time. SML shows all risky marketable securities. Also referred to as the characteristic line.

Investopedia explains Security Market Line (SML)

The SML essentially graphs the results from the capital asset pricing model (CAPM) formula. The x-axis represents the risk (beta), and the y-axis represents the expected return. The market risk premium is determined from the slope of the SML. The security market line is a useful tool in determining whether an asset being considered for a portfolio offers a reasonable expected return for its risk. Individual securities are plotted on the SML graph. If a security's risk versus expected return is plotted above the SML, it is undervalued because the investor can expect a greater return for the inherent risk. A security plotted below the SML is overvalued because the investor would be accepting less return for the amount of risk assumed.

Related Terms:
• Beta
• Capital Market Line
• Modern Portfolio Theory—MPT
• Systematic Risk
• Unsystematic Risk

Mentioned in	?		References in periodicals archive	?		Financial browser	?		Full browser	?
Capital Asset Pricing Model Capital Market Line CAPM CML Linea de mercado Market Risk Premium SML	Our analysis derives the extended equilibrium market equation and the security market line of the classical capital asset pricing model of Merton (1987) in continuous time. An intertemporal capital asset pricing model under incomplete ... by Bellalah, Mondher; Wu, Zhen / International Journal of Business This relationship is called the Security Market Line. Risky business--health care finance and the VA by Bromley, Howard R. / Physician Executive EVA in an EMH-World--a Financial Fiction In an EMH-world, where assets plot on the Security Market Line (SML) or Capital Market Line (CML), and asset prices (market prices) correspond to asset values (intrinsic values), it is not possible to meaningfully talk about a measure such as EVA. Operating income, residual income and EVA: which metric is more value ... by Paulo, Stanley / Journal of Managerial Issues	Securities Investor Protection Act of 1970 Securities Investor Protection Corporation Securities Law Enforcement Remedies Act Securities Lending Securities Lending Agreement Securities Loan Securities Markets Securities Subsidiary Securities Trade Securities Transfer Association Securitizacao Securitizacion securitization Securitized Securitized Mortgage security security agreement Security Analyst Security Characteristic Line security deposit Security Depository Security Industry and Financial Markets Association Security Industry Automated Corporation security instrument security interest Security Market Line Security Market Plane Security Plant Complex Security Ratings Security Selection Security Selection Decision Security Traders Association Security Valuation Security Valuation Model SED Sede central see-through building Seed Capital seed money Seek a Market Segment Segment Reporting Segmented Market Segregated Fund Segregation Segregation of Securities Seguimiento del ticker Seguranca alimentar Seguridad alimentaria Seguro Seguro contra riscos cambiais	Security Life Cycle Security Lifecycle Management Process Security Local Auditing Daemon security lock Security Logistics Agency security loophole Security management Security Management Application Process Security Management Architecture Security Management Information Security Management Information Base Security Management Information System Security Management Infrastructure Security Management Office Security Management Plan Security Management Service Security Management System Security Management System Enterprise Security Management System Online Security Management System-Modem Pool Security Management Working Group Security Manager Security Manager Workstation Security Manual Security Market Line Security Market Lines Security market plane Security Market Planes security measure security measures Security Message Exchange Security Modification Security Module Card Security Monitor Security Monitoring Security Monitoring And Tracking System Security Monitoring Centre Security Mutual Life Security National Automotive Acceptance Corporation Security National Bank Omaha Security National Mortgage Company Security Network for Technological Research in Europe Security News Network Security News Portal Security Night Assistance Patrol Security of Ad Hoc and Sensor Networks Security of Aircraft in the Future European Environment Security of Critical Networked Infrastructures Security of Information Act of 2003

Mentioned in

References in periodicals archive

Financial browser

Full browser

Capital Asset Pricing Model
Capital Market Line
CAPM
CML
Linea de mercado
Market Risk Premium
SML

Our analysis derives the extended equilibrium market equation and the security market line of the classical capital asset pricing model of Merton (1987) in continuous time.

An intertemporal capital asset pricing model under incomplete ... by Bellalah, Mondher; Wu, Zhen / International Journal of Business

This relationship is called the Security Market Line.

Risky business--health care finance and the VA by Bromley, Howard R. / Physician Executive

EVA in an EMH-World--a Financial Fiction In an EMH-world, where assets plot on the Security Market Line (SML) or Capital Market Line (CML), and asset prices (market prices) correspond to asset values (intrinsic values), it is not possible to meaningfully talk about a measure such as EVA.

Operating income, residual income and EVA: which metric is more value ... by Paulo, Stanley / Journal of Managerial Issues

Securities Investor Protection Act of 1970

Securities Investor Protection Corporation

Securities Law Enforcement Remedies Act

Securities Lending

Securities Lending Agreement

Securities Loan

Securities Markets

Securities Subsidiary

Securities Trade

Securities Transfer Association

Securitizacao