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CAPM: E[Rj] = r f + B j (R m -R f ) regression equation for estimating beta: R j =a j +B j R
CAPM: E[Rj] = rf + Bj(Rm-Rf)
regression equation for estimating beta: Rj=aj+BjRm+Ej
what is the relation between the two above?
why does the first equation not consider epsilon? and why does variance formula not consider alpha?
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