13. Sukuk investors observed liquidity risk because (a) delay or default on paym

Question

13. Sukuk investors observed liquidity risk because (a) delay or default on payments/repayments by the originator (b) asset value falls reducing repayment amount on maturity (c) no buyers in secondary market for sukuk (d) sukuk no longer being shari'ah compliant (e) none of the above 14. Financial institutions detect fraud through (a) operational Audit (Internal and External) (b) loan collection policies (c) client sampling (d) customer's complaints (e) all of the above Islamic REITs is defined as: (a) "An Islamic REIT is a collective investment scheme in real estate, in which the tenants operate 15. (b) "A REIT is physically able to generate stable, sustainable income through rental income and (c) "The total return of REIT's is subject to the performance of the property market. Hence, the unit (d) " REITs are also subject to the vagaries of market demand and supply. As such, market permissible activities according to the Shari'ah" capital appreciation, which can be used to continually pay regular dividends" price of a REIT may go down if its underlying properties drop in value." fluctuations, confidence in the economy and changes in the interest rates may affect REITs price"

Explanation / Answer

Liquidity Risk is the risk of not being able to meet short term financial commitments.

One major problem with holding sukuk investments is the fact that there is no established secondary markets for sukuk since debt trading is prohibited in Islamic Financing. This risk of not being able to liquefy investments is what is known as Liquidity Risk.

Thus, the correct answer here is option (c).

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