What is the meaning of Ri-Rf, and what ai is denoting for?
r_i is the return on stock i, and r_f is the risk-free rate, so r_i - r_f is the excess return of stock i over the risk-free rate.
\alpha_i is the idiosyncratic return on stock i that is not explained by the market\ risk\ premium, SMB, or HML.
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Thanks! 