III. True & False (1 point each) 6. As a general rule, banks are better rated than companies 7. Provisions take account of the upside and the downside 8. In disintermediation, banks do not carry market risk 9. Capital market trades debt and equity securities with maturities more than one year 10. With respect to its effect on liquidity, speculation is good for a market 11. The value of a stock is relatively easy to estimate because the cash flows are known 12. A liquid security with high turnover would have a somewhat lower price than an illiquid one 13. Arbitrage is when a person buys and sells a commodity or financial asset at different prices and timings to gain profit 14. WPI measures prices at the retail level 15. Housing starts is a lagging indicator 16. Market making is an approach to valuing the financial instruments thus realizing the gain/loss resulting from the change in market price 17. Margin trading amplifies the gain/loss based on ratio of the margin to the position 18. A future contract eliminates uncertainty about the future spot price than an individual can expect to pay for an asset at the time of delivery 19. Most Financial future contracts are settled physically 20. Bond holders have voting powers while stock holders do not