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Securities Market Line (SML) Show and explain how the securities market line plots the relationship between risk and return. Explain how a security may be

Securities Market Line (SML)

  1. Show and explain how the securities market line plots the relationship between risk and return.
  2. Explain how a security may be undervalued or overvalued based on the SML.
  3. Explain the concept of alpha. Show alpha graphically on the SML.

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