2025 CFA Level I Exam: CFA Study Preparation

Why should I choose AnalystNotes?

Simply put: AnalystNotes offers the best value and the best product available to help you pass your exams.

Find out more

Basic Question 0 of 15

If a stock is over priced, it would plot ______.

A. above the security market line
B. on the security market line
C. below the security market line

Check Answer Next Q Print

User Contributed Comments 1

User	Comment
0is4eva	Reading 79, p. 794: "Any security with an estimated rate of return that plots above the SML would be considered under-priced because it implies that you ESTIMATED you would receive a rate of return on the security that is above its REQUIRED rate of return based on its SYSTEMATIC RISK." The reverse: an overpriced stock plots below the SML since it provides less return than the required rate of return based on its systematic risk.

User

Comment

0is4eva

Reading 79, p. 794: "Any security with an estimated rate of return that plots above the SML would be considered under-priced because it implies that you ESTIMATED you would receive a rate of return on the security that is above its REQUIRED rate of return based on its SYSTEMATIC RISK." The reverse: an overpriced stock plots below the SML since it provides less return than the required rate of return based on its systematic risk.

You need to log in first to add your comment.

I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.

Andrea Schildbach

Learning Outcome Statements

describe and demonstrate applications of the CAPM and the SML

CFA® 2025 Level I Curriculum, Volume 2, Module 2.