If Prices Were Rising and a Canadian Company Wanted to Report

question 3

True/False

If prices were rising and a Canadian company wanted to report a smaller amount of profit for tax purposes, they should use the moving average cost flow assumption.

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Definitions:

Zero-coupon Bond

A bond that does not pay periodic interest, but is sold at a deep discount from its face value and redeemed at full value at maturity.

Rate of Return

The returns or setbacks realized from an investment over a certain time period, expressed as a percentage of the initial capital invested.

Yield to Maturity

The total return anticipated on a bond if the bond is held until it matures, factoring in all interest payments made over time.

Zero-coupon Bond

A bond that does not pay interest during its life and is sold at a discount from the face value, which is paid to the holder at maturity.