Risk-free rate - The rate used in CAPM is used as short-term
government yield which is itself subject to daily change while in
itself creates volatility which is not captured in the CAPM
model
Market return - The market return is a subjective term and
which index consisting of how many stocks should be used as a
reference is vague. Also, whether short-term market returns should
be considered or long term market returns should be considered is
subjective to the user.
The assumption to borrow at the risk-free rate is flawed as no
borrower carries zero risk and hence will never be able to raise
debt at the risk-free rate of interest.
Beta in itself is not constant and is subject to market returns
as well as the stock returns. Hence, zeroing down on a single
required rate of return is an absurd assumption which leads to
flawed results.