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:

Remittances

Payments by immigrants to family members and others located in the immigrants’ home countries.

Exchange Rate

A measure representing how much one currency can be exchanged for another, impacting international trade and finance.

British Pounds

The currency of the United Kingdom, used as a medium of exchange within the country and its territories.

Balance on Goods

Balance on goods refers to the difference between a country's exports and imports of physical products, excluding services.