The CAPM Computes Expected Rates of Return on Common Equity

Essay

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?