Where will a security plot in relation to the security market line (SML)if it is considered to be a good purchase because it is underpriced?
A)above the SML
B)either on or above the SML
C)on the SML
D)on or below the SML
E)below the SML

Question

Quizplus · Accepted Answer

A security that is underpriced will plot above the SML, indicating that it offers a higher expected return for its level of risk compared to the market's expectation.

Where Will a Security Plot in Relation to the Security