The CAPM computes expected rates of return on common equity capital using the following model:
$\mathrm { E } \left[ \mathrm { R } _ { \mathrm { Ej } } \right] = \mathrm { E } \left[ \mathrm { R } _ { \mathrm { F } } \right] + \beta _ { \mathrm { j } } \mathrm { X } \left\{ \mathrm { E } \left[ \mathrm { R } _ { \mathrm { M } } \right] - \mathrm { E } \left[ \mathrm { R } _ { \mathrm { F } } \right] \right\}$
What are the roles of each of the three components of this model?

Question

The CAPM computes expected rates of return on common equity capital using the following model:
 $\mathrm { E } \left[ \mathrm { R } _ { \mathrm { Ej } } \right] = \mathrm { E } \left[ \mathrm { R } _ { \mathrm { F } } \right] + \beta _ { \mathrm { j } } \mathrm { X } \left\{ \mathrm { E } \left[ \mathrm { R } _ { \mathrm { M } } \right] - \mathrm { E } \left[ \mathrm { R } _ { \mathrm { F } } \right] \right\}$ 
What are the roles of each of the three components of this model?

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The Answer of The CAPM computes expected rates of return on common equity capital using the following model:
 $\mathrm { E } \left[ \mathrm { R } _ { \mathrm { Ej } } \right] = \mathrm { E } \left[ \mathrm { R } _ { \mathrm { F } } \right] + \beta _ { \mathrm { j } } \mathrm { X } \left\{ \mathrm { E } \left[ \mathrm { R } _ { \mathrm { M } } \right] - \mathrm { E } \left[ \mathrm { R } _ { \mathrm { F } } \right] \right\}$ 
What are the roles of each of the three components of this model?

The CAPM Computes Expected Rates of Return on Common Equity