The Pure Play Approach

question 203

Multiple Choice

The pure play approach:

• A) Cannot be used if the firm has preferred stock outstanding.
• B) Is easier to implement than the subjective approach.
• C) Is most useful when each division makes a multitude of different products.
• D) Should be used only if a firm has more than three divisions.
• E) Can be used to find the cost of capital for a division.

---

Definitions:

Geologic Timescale

A system of chronological dating that relates geological strata to time, used by geologists and other Earth scientists to describe the timing and relationships of events in geologic history.

Density

Density refers to the mass of a substance per unit volume, a fundamental property affecting the buoyancy and stability of objects in fluids.

Basalt

A dark, fine-grained volcanic rock that is formed from the rapid cooling of basaltic lava exposed at or very near the surface.

Tan Silt

Fine-grained sedimentary material with a distinctive tan color, composed of quartz and feldspar, often transported by water or wind.