[Verse 1]
There's a line that shows expected return
Based on risk that makes your money churn
Beta measures how your stock will move
When the market starts its dancing groove
Risk-free rate plus beta times the spread
Market premium keeps investors fed
[Chorus]
Security Market Line, shows what you should earn
Alpha's the difference, that's the key to learn
Above the line means undervalued gold
Below the line means overpriced, be bold
S-M-L and alpha tell the tale
Buy low alpha stocks, let profits sail
[Verse 2]
CAPM is the model that we use
Calculate returns, you just can't lose
Take the risk-free rate, that's where you start
Then add beta times the market part
Market return minus risk-free rate
That's the premium, don't hesitate
[Chorus]
Security Market Line, shows what you should earn
Alpha's the difference, that's the key to learn
Above the line means undervalued gold
Below the line means overpriced, be bold
S-M-L and alpha tell the tale
Buy low alpha stocks, let profits sail
[Bridge]
Positive alpha, buy that stock today
Negative alpha, better walk away
Zero alpha means it's fairly priced
Market efficiency, investment diced
Plot your portfolio, see where it lands
Alpha gives you the upper hand
[Verse 3]
Jensen's alpha measures manager skill
Beating benchmarks gives investors thrill
Risk-adjusted returns show the truth
Separate the skill from market proof
Expected versus actual return spread
Alpha separates the quick from dead
[Chorus]
Security Market Line, shows what you should earn
Alpha's the difference, that's the key to learn
Above the line means undervalued gold
Below the line means overpriced, be bold
S-M-L and alpha tell the tale
Buy low alpha stocks, let profits sail
[Outro]
Draw the line and find your alpha way
CAPM guides you every trading day
Security Market Line will never fail
When alpha's positive, you'll always sail