thanks, i am cleared now, i was just looking at the other way not by the book....... i got it.... Here is few others lets see. 1. What type of option is the right to purchase stock at a fixed price for a specified period? a. flexibility option b. financial option c. legal option d. timing option 2. The appropriate interest rate to use in capital budgeting is a. always the company's cost of capital b. is the company's cost of capital if the project's risk is about the same as the company's c. the cost of capital plus any additional risk premium required to compensate for the project's higher risk d. b and c 3. A company's cost of capital is the most appropriate discount rate to use when analyzing which type of project(s)? a. replacement projects b. expansion projects c. new venture projects d. replacement and expansion projects e. expansion and new venture projects 4. Multidivisional firms are often unable to obtain an appropriate surrogate for determining the beta of a division. An acceptable alternative technique is to develop a beta through the division's accounting records. This is accomplished by: a. regressing the division's projected return on equity against the return on a major company in a similar business b. regressing the division's accounting return on equity in previous years against the return on a major stock market index c. regressing the division's projected return on equity against the historic return on a major stock market index d. none of the above 5. When a similar company can't be found to use in estimating a divisional beta, the division's own records can sometimes be used instead. This method is called a. pure play b. CAPM c. accounting beta d. financial accounting