Question: True or false? Explain briefly. a. Book profitability measures are biased measures of true profitability for individual assets. However, these biases wash out when firms

True or false? Explain briefly.

a. Book profitability measures are biased measures of true profitability for individual assets. However, these biases “wash out” when firms hold a balanced mix of old and new assets.

b. Systematic biases in book profitability would be avoided if companies used depreciation schedules that matched expected economic depreciation. However, few, if any, firms have done this.

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a False The biases rarely wash out For example steady state income may not b... View full answer

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