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READING 10: THE STANDARD CAPITAL ASSET PRICING MODEL #9

Open Grefer opened 5 years ago

Grefer commented 5 years ago

https://www.melonsblog.cn/2019/09/reading-10-standard-capital-asset.html#more

Grefer commented 5 years ago

The security below the SML is overvalued because while getting the same expected return, it takes more risk (bigger β) than the security on the SML, which means overvalued. On the other sides, the security above the SML is undervalued because while taking the same risk (β) , it gets more (bigger) expected return than security on the SML.