Security market line

Good morning, dear participants of WSO!

I am the student right now and dont have any financial background yet but i really would like to deeper my knowledge in this sphere. So Ive recently faced one topic that is SML, aka Security market line. Please can you help me explaining in detail how to build this graph.

First of all, we have y-axis that is expected return and x-axis that is beta. Then we build the SML that goes through two points on the graph - risk free rate on the y-axis and the point having the following coordinates (beta = 1; expected market return ~ 11-12%). Right?

After that we plot various securities on the graph and look at if the point is above or under the line. In the first case the share is undervalued but in the second is obviously overpriced. Right?

But the question really is how do we plot these securities on the graph. So we need the E(r) and the beta of a share. Using CAPM?

If you have any practical example of how to build the SML line and share it with me i will be very thankful!