How do you answer these ?

Make the necessary assumptions to solve this question. Be sure to answer all sub questions. Explain your calculations, support your answers and state in detail any relevant assumptions required. The table below reports the expected returns and betas of stock of company R and stock of company S: Table 1: Expected returns and betas of stock of companies R and 5 Stock Beta Expected Stock Return Company R 1.25 0.108 Company'S 0.87 0.084 Using the Capital Asset Pricing Model (CAPM), determine the market risk premium. Which stock has more undiversifiable risk? Explain the CAPM, its underlying advantages and limitations. Also identify the limitations of using the CAPM during a financial crisis (using a maximum of 200 words)