"The SEMI}! Market Line (SML) is essentiallyr a graph representation of CAPM formula. It plots the expected return of stocks on the y-axis, against beta on the sasis. The intercept is the risk free rate and the slope represents the market premium. Individual securities' expected return and risk are plotted on me SML graph. For one security, if it is plotted above the SML, it is undervalued as the investors are expecting a greater return for the same amount of risk {beta}. If it is plotted below te SML it is overvalued as the investors would accept a lower return for the same amomtt of risk {beta]." 31E} Elam} Bets