Market model - Portfolio risk & return

CFA Level I Portfolio Management
#1

In the topic of return generating models where the formula is -

E(Ri) - Rf = βi1 x E(Factor 1) + βi1 x E(Factor 2)… βik x E(Factor k). And then after that theres a single factor model which is also known as a single index model and then theres a simplified model of signle index model called the market model which has the formula - Ri = αi + βiRm + εi. So my question is why doesn’t this formula have the EXPECTED return on the asset - i like the other formula does. Would really appreciate it if someone could help me out on this one. Thanks in advance!

#2

It would be the expected return without the error term (εi); the error term represents the difference between the actual return and the expected return.