10. Marketing challenges are (a) developing new products (C) balancing profit an
ID: 2807914 • Letter: 1
Question
10. Marketing challenges are (a) developing new products (C) balancing profit and development (d) promoting new client profiles (e) all of the above Islamic financial institutions can avoid or elimiate tbes and processes o-tandardization of all business-related activities a (b) increase time of holding of the trading co (c) construction of a diversified portfolio (d) not to fulfill the binding of contracts 12. Operational Risk refers as (a) transactions Risk (b) fraud Risk (c) legal Risk (d) all of the above (e) none of the above 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 13. 14. Financial institutions detect fraud through (a) operational Audit (Internal and Extenal) (b) loan collection policies (c) client sampling (d) customer's complaints (e) all of the above (a) "An Islamic REIT is a collective investment scheme in real estate, in which the tenants operate (b) "A REIT is physically able to generate stable, sustainable income through rental income and (c) "The total return of REITs 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 15. Islamic REITs is defined as: 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
11- (c)
Financial institutions can reduse their risk by diversifying their portfolio. Completely avoiding or eliminating risk is not a proctical possibility. As long as the institution has an open investment there will be some amount of risk involved.
12- (d)
Operatinal risk refers to the risk that arise due to conducting of regular business activities. Hense transaction risk, fraud risk and legal risk all become a part of operational risk.
13-(c)
Liquidity risk arises when an instrument cannot be converted into cash timely at the right price. This situation arises when there are no buyers in the market. Same was the case with sukuks as the secondary market was not developed the buyers were not available thus arising the liquidity risk.
14-(e)
Financial institutions have to constantly monitor for fraud in the institution. They detect fraud mainly through customer complaints and internal and external audits.
15-(a)
Islamic REITs are very much similar to normal REITs with the additional feature of being compliant with the Shariah. This means that the property should not be used for activities prohibited under shariah.
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