AMIT KAUNTIA

ID NO- PGDIBF/914/13/E
RV 13
POST GRADUATE DIPLOMA IN ISLAMIC BANKING AND FINANCE
ASSIGNMENTS FOR MODULEV(SECOND PHASE)

SECTION ONE
Each qu!"#$% ca&&#! ' Ma&(! (1) *u!"#$%! + ' Ma&(! , ') Ma&(!)
A%!-& #% FOUR $& FIVE .#%! $%./0
1. Define Pure Ijarah Sukuk.
Pure Ijarah Sukuk certificates are issued on stand-alone assets identified on the balance sheet. The
assets can be parcels of land to be leased or leased equipment such as aircrafts and ships. The rental
rates of returns on these Sukuk can be both fixed and floating depending on the particular originator.
Ijarah Sukuk are the securities representing onership of ell defined existing and knon assets tied
up to a lease contract! rental of hich is the return pa"able to Sukuk holders.
#. $o do "ou define %quit"& 'ention its characteristics.
Equ#"/ represents an in(estment exposed to all kinds of business risks and sharing in the profits of the
business. It ma" be of a permanent nature! i.e.! redeemable onl" upon liquidation of the business or
earlier b" mutual agreement but not on demand. Its characteristics are) 1* L#1#"2 .#a3#.#"/ 4) P&$5#"
!ha&#%6 3) H#6h./ .#qu#2 7) C$&8$&a" c$%"&$.0
+. ,hat is the origin of Islamic ,ealth 'anagement& ,here does it extend to&
Islamic ,ealth 'anagement originates from basic concept of ealth and extends to the basic
structures Islamic -inancial Products! portfolio management! asset allocation and o(erall financial
planning. In Islam 'ankind is trustee of the creator and all belongs to him as made clear in .uran.
Islamic ,ealth 'anagement has three phases i.e. proper aquistion of ealth! preser(ation of ealth
and disposal of ealth.
/. ,hat are the Shari0ah compliance screening parameters for Do 1ones Islamic Index&
The shariah compliance screening parameters for Do 1ones Islamic Index are as under)
I%2u!"&/ Sc&%!
Do 1ones pro(ides a list of different t"pes of industries hich shariah ad(isor" board has classified as
non-compliant. The" are as under)
2lcohol
Pork-related products
3on(entional financial ser(ices
%ntertainment
Tobacco
,eapons and defense
F#%a%c#a. Ra"#$ Sc&%! 9
2ll of the folloing must be less than ++4)
Total debt di(ided b" trailing #/-month a(erage market capitali5ation
The sum of a compan"0s cash and interest-bearing securities di(ided b" trailing #/-month
a(erage market capitali5ation
2ccounts recei(ables di(ided b" trailing #/-month a(erage market capitali5ation.
6. ,hat is 'urabaha instrument of finance mostl" used for&
'urabaha is one of the most idel" used modes of finance b" the Islamic 7anks. It is suitable for
partial financing to the in(estment acti(ities of the customers! in industr"! trade or other8 it enables the
customer 9 in(estor to obtain finished goods! ra material! machines or equipment from the local
market or through import.

:. Define Islamic In(estment 7anking. $o does it operate&
In(estment 7anking as earlier knon as 'erchant 7anking. In(estment 7ankers do not in(ol(e in
;etail 7anking b" in(esting their funds ith indi(idual or pri(ate 9 corporate entities. Instead the" in(est
in Islamic 'utual -unds! Islamic 7onds - S<=<=! %quit" -unds and such other 'arket Securities.
There are se(eral a"s that banks can structure accounts so that the" are sharia-compliant.
I:a&a orks as a leasing arrangement) the bank bu"s something for a customer and then leases it back
to them. Different forms of leasing are permissible! including those here part of the instalment
pa"ment goes toard the final purchase. This might be used to help "ou bu" a car or other item! or to
help a business bu" equipment.
Mu&a3aha orks b" the bank suppl"ing goods for resale to the customer at a price that includes a
margin abo(e the costs! and allos them to repa" in installments. This might be used to pro(ide a
mortgage on a propert". The propert" is registered to the bu"er from the start.
Mu!ha&a(a is a joint (enture in hich the customer and bank contribute funding to an in(estment or
purchase and agree to share the returns >as ell as the risks* in proportions agreed in ad(ance.
;a(a.a is an agreement that the bank ill ork as the indi(idual?s agent. If a sa(er enters into this t"pe
of agreement! the bank can use their cash to in(est in sharia-compliant trading acti(ities to generate a
target profit for them.
@. Present a brief rite up on $AD%ID2$ ISB2'I3 'I3;A -IC2C3% program of Demen.
The Demen $odeidah microfinance program as launched in 1EE@ and funded b" grants from the
Demen Social -und for De(elopment. It uses "murabaha" and is based on a group lending approach.
The program purchases the goods and resells them to the borroer ith a markup ho repa"s in equal
installments. The final installment being the ser(ice charge plus remaining principal as earlier pa"ments
are onl" for the principal. The implicit ser(ice charge is higher than hat commercial banks charge.
There is no penalt" in case of late pa"ment! except for fees and transportation costs charged for legal
follo up. The program ma" ha(e suffered from high transaction costs and contract ser(icing
performance.
F. ,hat are 'utual -unds&
'utual -unds are groups of stocks and other in(estment instruments managed b" professionals and
pooling mone" from thousands of In(estors and le(eraging the aggregate amount of the pooled mone"
in bu"ing stocks and bonds. The main difference beteen the 3on(entional 'utual -und and Islamic
'utual -und is that Islam prohibits from In(esting in Debt -und.
E. $o do in(estors share profit in Islamic 'utual -unds& ,hat are their modes of in(estment&
In Islamic fund in(estment! the profit and shares is distributed based on modes of in(estment agreed b"
the in(estors8 among the modes of in(estment are Ijarah fund! equit" fund! commodit" fund!
murabahah fund! mixed fund and man" more.
1G. ,hat are the qualities of Sukuk hich appeal to in(estors&
The" are tradable Shariah-compliant capital market products pro(iding medium to long-term
fixed or (ariable rates of return.
The credit qualit" of Sukuk instruments is assessed and rated b" international rating agencies!
hich in(estors use as a guideline to assess risk9return parameters of a Sukuk issue.
The" are characteri5ed b" regular periodic income streams during the in(estment period ith
eas" and efficient settlement and also pro(ide the possibilit" of capital appreciation of the
Sukuk.
The existence of a secondar" market pro(ides liquidit" to the Sukuk instruments.

SECTION T;O
Each qu!"#$% ca&&#! ' Ma&(! (1) *u!"#$%! + ' Ma&(! , ') Ma&(!)

A%!-& #% ONE $& T;O .#%! $%./.
1. In the context of Sukuk ho are 'urabaha and Istisnaa defined&
Mu&a3aha - In this case the issuer of the certificate is the seller of the 'urabahah commodit"! the
subscribers are the bu"ers of that commodit"! and the reali5ed funds are the purchasing cost of the
commodit". The certificate holders on the 'urabahah commodit" and are entitled to its final sale price
upon the re-sale of the 3ommodit". The possibilit" of ha(ing legall" acceptable 'urabahah-based Sukuk is
onl" feasible in the primar" market. The negotiabilit" of these Sukuk or their trading at the secondar"
market is not permitted b" Shari0ah! as the certificates represent a debt oing from the subsequent bu"er
of the 3ommodit" to the certificate-holders and such trading amounts to trading in debt on a deferred basis!
hich ill result in ;iba.
Despite being debt instruments! the 'urabahah Sukuk could be negotiable if the" are the smaller part of a
package or a portfolio! the larger part of hich is constituted of negotiable instruments such as
'udarabah! 'usharakah! or Ijarah Sukuk. 'urabahah Sukuk is popular in 'ala"sian market due to a
more liberal interpretation of fiqh b" 'ala"sian jurists permitting sale of debt >bai-al-da"n* at a negotiated
price.
Steps in(ol(ed in the structure)
2 master agreement is signed beteen the SPH and the borroer
SPH issues Sukuk to the in(estors and recei(e Sukuk proceeds.
SPH bu"s commodit" on spot basis from the commodit" supplier.
SPH sells the commodit" to the borroer at the spot price plus a profit margin! pa"able
on installments o(er an agreed period of time
The borroer sells the commodit" to the 3ommodit" bu"er on spot basis.
The in(estors recei(e the final sale price and profits.
I!"#!%a Su(u( - the" are certificates that carr" equal (alue and are issued ith the aim of mobili5ing the
funds required for producing products that are oned b" the certificate holders. The issuer of these
certificates is the manufacturer >supplier9seller*! the subscribers are the bu"ers of the intended product!
hile the funds reali5ed from subscription are the cost of the product. The certificate holders on the
product and are entitled to the sale price of the certificates or the sale price of the product sold on the basis
of a parallel Istisna! if an". Istisna Sukuk is quite useful for financing large infrastructure projects. The
suitabilit" of Istisna for financial intermediation is based on the permissibilit" for the contractor in Istisna
to enter into a parallel Istisna contract ith a subcontractor. Thus! a financial institution ma" undertake
the construction of a facilit" for a deferred price! and sub contract the actual construction to a
speciali5ed firm. Shari0ah prohibits the sale of these debt certificates to a third part" at an" price other
than their face (alue. 3learl" such certificates cannot be traded in the secondar" market.
Steps in(ol(ed in the structure)
SPH issues Sukuk certificates to raise funds for the project.
Sukuk issue proceeds are used to pa" the contractor9builder to build and deli(er the future
project.
Title to assets is transferred to the SPH
Propert"9project is leased or sold to the end bu"er. The end bu"er pa"s monthl"
installments to the SPH.
The returns are distributed among the Sukuk holders.
#. ,hat are the three main t"pes of Islamic 3ontracts& Came and describe them.
Islamic contracts hich are basicall" di(ided into three main t"pes are)
1. ,2?D >2 promise* - In ,2?D the promise is unilateral and unconditional >eg) a demand promissor"
note*
#. '<,22D2 or '<?2$ID2 >7ilateral promise* - '<,22D2 or '<2?$ID2 is a bilateral promise >eg)
3ontracts of guarantee! indemnit"! and also co(er 'orabaha and 'usharika agreements*.
+. 2.D >3ontract* - 2n 2.D contract >contract in(ol(ing to parties* ith a monetar" consideration.
+. In Islamic microfinance and social responsibilit"! hat are the conditions hich Islamic financial
institutions ha(e to abide&
In Islamic 'icro finance and social responsibilit" the conditions hich Islamic -inancial institutions ha(e
to abide are prohibiting usur" >riba*! intolerable uncertaint" >gharar* and gambling >ma"sir*.
/. Came the different t"pes of documents required in financial transactions.
T"pes of Document required in financial transaction are as under)
I. 3ontracts! 'orabaha 2greement! Sale Deed! 'osharaka 2greement! ,ill! 'odarabaha 2greement
;elease Deed! Ijara 2greement! Ienarate! Indemnit"! 'ortgage Deed
II. Demand Promisor" Cote - Is a promise made b" the person oing mone" to the person to hom it is
oned to repa" the mone" on demand.
6. ,hat is the main difference beteen a 3on(entional mutual fund and an Islamic mutual fund&
The main difference beteen the 3on(entional 'utual -und and Islamic 'utual -und is that Islam
prohibits from In(esting in Debt -und.
:. ,hat is stamping of a document&
Stamping of Document) To be made legall" (alid in a 3ourt of Ba the documents ha(e to be stamped
7%-A;% %xecution. Stamp papers of different (alues in printed form are a(ailable ith stamp (endors
ho are authori5ed to sell the same. Some documents hich are regularl" used are printed on plain
paper and a special adhesi(e stamp is affixed on this b" the office of ;egistration of Stamps. ;e(enue
Stamps are usuall" affixed on Demand Promissor" Cotes and receipts hen the amount exceeds a
particular (alue of transaction. 2n unstamped document is in(alid in la under stamped document can
be regulari5ed b" affixing additional stamps of required stamp dut". %(er" countr" has its Ba of
registration! stamps and their (alue.
@. Ane of the potential benefits of microfinance isJJ 3omplete the statement.
Ane of the potential benefits of microfinance in 'uslim societies is the empoerment of 'uslim
omen. ,hile the abilit" of microfinance institutions to deli(er financial ser(ices to rural omen in
gender-segregated societies is commendable! orking ith 'uslim omen is a sensiti(e issue that
often raises accusations of meddling ith social codes.
F. An hat concepts are instruments of risk management and insurance in Islamic microfinance
based&
Instruments of risk management and insurance in Islamic microfinance are based on the concept of
guarantee >kafala* and collateral >damanah*. In case of financing indi(iduals! guarantee is used as an
alternati(e to collateral >e.g. kafala or guarantee b" to persons is considered adequate b" Pakistan-
based 2khuat* and as a tool to manage the risk of default and delinquenc". 2s stated earlier! in case
of financing groups8 mutual guarantee >kafala* is used b" almost all microfinance institutions K both
con(entional and Islamic.
E. ,hat are the basic obligations of Shari0ah Super(isor" 7oards for Islamic mutual funds .,hat do
the" ensure and monitor&
a) P$&"5$.#$ Pu&#5#ca"#$%< F#!ca. a%2 M$&a. 9 'an" 'uslims are familiar ith the practice of purif"ing
their checking accounts! for example! b" simpl" donating the amounts listed as interest earned to
charit". Thus! our concern from a Shariah perspecti(e is ith amounts of mone" earned b" the
corporations in hich our Islamic mutual fund has in(ested8 mone" earned b" means deemed
unacceptable b" Shariah principles and teachings. Such impure earnings must be quantified and then
purified.
Af course! the assumption here is that these are stocks that ha(e cleared the (arious screens for
Shariah compliance. Thus! the sources of such income might include non operating income from
interest-bearing in(estments! or earnings from prohibited business acti(ities that are be"ond the scope
of a compan"0s primar" business.
The responsibilit" of the Shariah super(isor in this regard is to ensure that all such income is calculated
b" the fund! and that a corresponding percentage is deducted from the earnings! passed on to
in(estors through the di(idends! thereb" ensuring that these are free of impurities and completel" halal.
The methodologies for calculation ma" differ from fund to fund! or from one.
The second half of the purification equation is hat I term moral purification! and I consider it no less
important than the fiscal purification of earnings. ,hen speaking of fiscal purification! the thing that
comes immediatel" to mind is that e are dealing ith an amount of mone" that has been earned b"
means e find unacceptable! and is therefore in need of purification. So! in our haste to put aside the
offending percentage! e often o(erlook our moral and religious responsibilit" in the matter. This
responsibilit" is perhaps best understood in the context of the .uran concept of enjoining the right and
prohibiting hat is rong.
3) P$&"5$.#$ S.c"#$%< Sc&%#%6 S"$c(! 9 <ndoubtedl"! one of the most important functions of a
Shariah Super(isor" 7oard is its scrutin" of equities for compliance ith established! Shariah-based
criteria. It has no become common knoledge in regard to the Shari?ah screening of equities! that
be"ond the quantitati(e screening of securities is the highl" subjecti(e matter of ethics! and hat is
sociall" responsible. 2gain! from the perspecti(e of enjoining the good and prohibiting hat is rong! I
belie(e that it is the responsibilit" of Shariah Super(isor" 7oards to ork on these issues! e(en after a
fund has licensed to an in(estable uni(erse through an index.
2 compan"?s ethics! unlike its primar" business and capital structure! are highl" subjecti(e and not
easil" quantified. In considering issues of this nature! it is important that the fund?s Shari?ah Super(isor"
7oard orks closel" ith management on policies and guidelines that ill adequatel" co(er these
issues. Islamic in(esting has much in common ith the modem forms of in(esting knon as ethical
in(esting! sociall" responsible in(esting! faith in(esting! and green in(esting. %ach of these in(estment
sectors! or subsectors! has much of (alue to contribute8 and each has something in common ith the
teachings of Islam. It is therefore important for Shari?ah Super(isor" 7oards to keep abreast of hat is
happening in these areas. The internet is an excellent tool for the purpose of research into these forms
of in(esting! the organi5ations that support and implement their principles! and the issues that concern
them. Perhaps the most encouraging thing for 'uslim in(estors to note about the funds that ha(e
gron up around these concepts is that the" ha(e been (er" successful! and that the" are the fastest
groing sector on the market.
c) P$&"5$.#$ M$%#"$&#%6 9 7e"ond selecting stocks is the equall" important task of monitoring stocks. In
the business orld! there is (er" little that remains the same. 2 compan" ith non-operating interest
income at less than fi(e percent for the present quarter ma" sho earnings in excess of fifteen percent
for the next. Ab(iousl"! (igilance is required in these matters to ensure that all of the fund0s holdings
remain ithin the limits of the prescribed Shariah filters. 2gain! hen a fund is licensed to an index!
information of this nature ill be passed on b" the index pro(ider as a matter of course. In such cases!
the responsibilit" of the Shariah super(isor ill be to (erif" the remo(al of the securit" from the fund?s
portfolio. In the case! hoe(er! that the fund is not licensed or otherise positioned to recei(e such
information! e(en more (igilance is required.
It is the responsibilit" of Shariah super(isors to ensure that this sort of (igilance is maintained.
2) M$%#"$&#%6 Ma%a61%" 9 The Shariah super(isor" function includes (igilance in relation to the
management of the Islamic equit" fund as ell. Ane of the most important issues in this regard is the
funds cash-to-assets ratio. -und or portfolio managers ma" keep a large cash portion on hand if! for
example! the" are bearish on the market! or if the" are unable to find attracti(e securities to bu"! or! in
the case of an index fund! if the" are temporaril" unable to purchase the stocks needed to match the
index. Af course! the reason for the concern of the Shariah Super(isor" 7oard under these
circumstances is the possibilit" that idle cash ill lead to interest.
Bikeise! Shariah Super(isor" 7oards must be especiall" (igilant hen! oing to ad(erse market
conditions! management decides to assume temporar" defensi(e positions. These ma" occur as the
result of political! economic! or a host of other reasons. The important thing! hoe(er! is that the 7oard
ensure that the strateg" does not include recourse to the con(entional! knee jerk strategies of mo(ing
into high qualit"! short term securities and mone" market instruments! or commercial or agenc" paper!
or T-bills! or 3Ds. 2t such times! it ill be best for management to con(ene a meeting of the Shariah
Super(isor" 7oard! or at least to confer ith the members either indi(iduall" or b" hate(er other
means! for the purpose of discussing to hat lengths the fund ma" go. Ab(iousl"! hen such situations
occur! it is the expertise of the portfolio managers and anal"sts that ill determine the defensi(e
strateg". It is the Shariah Super(isor" 7oard! hoe(er! that ill determine hether or not that strateg"
is a laful one from a Shariah perspecti(e.
2nother thing that Shariah super(ision ill atch for is the purchase of equities on margin. ,hile
managers are aare that such purchases are not permitted! oftentimes their brokers are not. It is for
this reason that Shariah super(isors must be on guard for these sorts of seemingl" innocent mistakes.
) M$%#"$&#%6 F! 9 one of the most important of all the different functions performed b" a
Shariah Super(isor" 7oard is its ensuring that the consumer is made aare of the funds fees and ho
these are structured. $ere again! the Shariah Super(isor" 7oard finds itself in the role of consumer
ad(ocate. ,hile there is generall" no formal channel for communication >other than quarterl" or annual
reports* beteen the 7oard and those ho in(est in the Islamic fund! the responsibilit" in this regard is
not so much consumer education as it is a matter of the 7oard0s satisf"ing itself of to essential
matters. -irstl"! that the fee structure is a reasonable one and! secondl"! that the fees are clearl" stated
in the funds literature and otherise communicated ithout ambiguit" to in(estors.
5) M$%#"$&#%6 Fu%2 D$cu1%"a"#$% 9 Perhaps more than monitoring! this function of a Shariah
Super(isor" 7oard is actuall" one of assisting management in the preparation of filings for regulator"
agencies like the Securities and %xchange 3ommission! subscription agreements! pri(ate placement
memorandums! fund prospectuses! and the like. Ab(iousl"! in the preparation of such documentation
references ill ha(e to be made to the Shariah and its interpretations. -or this reason! it is essential
that the expertise of Shariah scholars be accommodated. It is clearl" of inestimable importance that the
documents hich define the Islamic mutual fund and the a"s it orks are in complete consonance
ith Shariah precepts. The onl" a" to ensure this is to ha(e the Shariah Super(isor" 7oard in(ol(ed
in the drafting and re(ie of all pertinent legal and business documentation.
6) M$%#"$&#%6 "h I%2u!"&/ 9 2s academics! the members of Shariah Super(isor" 7oards ill
naturall" keep abreast of scholarship in their respecti(e fields and speciali5ations. 2s professionals! it is
equall" essential that e remain informed of de(elopments in the industr" e super(ise. In order to
comprehend the issues full"! the sorts of issues that require the attention of the Shariah Super(isor"
7oards! it is important to understand them in the broader context of the marketplace in general. -rom
this perspecti(e! the attention brought to bear on the issues b" the 7oard ill certainl" be more
pertinent8 ith the result that the 7oard0s decisions ill be more informed and ultimatel" of more (alue
to the in(estor. This is not to sa" that Shariah Super(isor" 7oards should tell management ho to run
their business. ;ather! hat I mean to sa" is that a 7oard that is sensiti(e to the business en(ironment
is an effecti(e 7oard.
h) P&$2uc" D=.$81%" 9 ,hile the issue of product de(elopment is more commonl" associated
ith Islamic banks! there is nonetheless a certain amount of scope for it in Islamic mutual funds as ell.
,ith the goal of mitigating risk through portfolio di(ersification! an Islamic fund might consider turning to
markets other than the stock market! or to target other asset classes! like ;%ITS. Ar the fund ma" ant
to do something different as a part of a defensi(e strateg" for a bearish market! or as a a" to manage
short term liquidit". ,hate(er the case! there ill be a clear need for the expert ad(ice and assistance
of the Shariah Super(isor" 7oard.
#) R6u.a& R8$&"! 9 -inall"! one of the most important functions of a Shariah Super(isor" 7oard
is to prepare reports on the status of the fund it super(ises. Such reports are best issued quarterl" and
should address issues of Shariah-compliance in the portfolio! and on the part of management.
Bikeise! the reports should keep in(estors informed of the purification process and the charitable a"s
in hich purification mone" has been put to use b" the fund. Ather issues of rele(ance to the
super(ision of the fund might also be mentioned in the reports! like the ne softare that enables the
7oard to easil" monitor the funds portfolios! or to screen stocks for Shariah-compliance! and so on. In
addition! the 7oard ma" use the reports to communicate the a"s in hich it is addressing issues
related to sociall" responsible in(esting and the business ethics and practices of corporations.
1G. Argani5ations such as -IC32 and '<SBI' 2ID ha(e de(eloped certain models. Describe them.
Argani5ations such as -IC32 and 'uslim 2id ha(e de(eloped models that might be potentiall"
appealing to Islamic financial institutions as liquid in(estments. The models ha(e a pro(en track record
of performance that can be relied on b" Islamic financial institutions to extend credit and achie(e
abo(e-a(erage financial and social returns.
'uslim 2id implemented a project in 3olombo in partnership ith 2mana In(estment to pro(ide micro-
finance to the urban poor. 'uslim 2id in(ested on a mudarabah basis ith 2manda In(estment! hich
then proceeded to manage the micro-finance fund. 2manda In(estment disbursed and reco(ered
hile 'uslim 2id as responsible for communit" mobilisation and training and moti(ating the
communit" to pa" back the loan. 2 scheme like this could also be operated on a musharaka basis.
Boans ere gi(en to these small and medium enterprises on a mudarabah and murabaha basis. The
hole principal as reco(ered.
The same model could potentiall" be applied on a for-profit basis ith a fixed income stream. 'icro-
finance loans can be pro(ided to indi(iduals to lease or sell assets! for hich the" ould pro(ide the
lease pa"ments or sale price pa"ments o(er a period.
-IC32 did the same in 2fghanistan! utilising con(entional funds but pro(iding murabahas to
customers to ensure Shariah compliance. These asset pools could effecti(el" be utilised as the basis
for Shariah-compliant 5ero coupon sukuk. The sukuk could be marketed primaril" to Islamic banks that
ha(e surplus charitable funds a(ailable for disbursement. These funds could be returned to the banks
at the end or the period or be utilised in subsequent rounds of in(esting. ,hen the model establishes
a track-record of performance and stabilit"! it could be categorised as an in(estment class asset
ith a strong rating from a ratings agenc" and subsequentl" be marketed to institutional in(estors and
Islamic financial institutions as part of their performing asset pool. $oe(er! the asset manager ould
still ha(e to o(ersee the qualit" of financing disbursed and the methodolog" of financing appro(als!
and monitoring should be audited continuall" to ensure performance of the asset pool.

SECTION THREE
Each 3#" ca&&#! 4 Ma&(! (4) *u!"#$%! + 4 Ma&(! , 7) Ma&(!)
F#.. u8 "h 3.a%(! -#"h a88&$8&#a" -$&2!0

1. The to t"pes of assets a(ailable to an in(estor are 8h/!#ca. a!!"! a%2 5#%a%c#a. a!!"!.
#. 'utual -unds can be broadl" classified into to categories O8% 9%22 Fu%2! a%2 C.$!9
%22 Fu%2!0
+. Three t"pes of Sukuk are Pure Ijarah Sukuk ! Hybr!/P""#$! Sukuk and %arab#$ &a'$
&$!$$(ab#$ ukuk .
/. The le(erage ratio of total debt of Target 3ompan" should be 33>0
6. To important Shariah 3ompliant in(estment mechanisms are a Mu&a3aha (c$!" 8.u! 5#%a%c) a%2
Ba# A.9A&3$$% (a Sha&#a?a a."&%a"#= "$ ca.. $8"#$%!)0
:. ,ealth can be both 3%5#c#a. (Arabic: NE MAH) a%2 detrimental (Arabic: NIQMAH).
@. Hiable 'odels of Islamic 'icro finance operate through sale contracts such a! (urabaha a%2
(u)a*a(a
F. Islamic ,ealth 'anagement deals ith certain fast emerging fields like HIBA (Gift), WAQF and Al
Faraiz (Ineritance).
E. Sponsor of a Henture 3apital -und can act as a M!dareb !nder a M!daraba arran"ement #r a
Wa$eel !nder a Wa$ala (a"enc%) arran"ement, #r an in&e'tment mana"er (!r'!ant t# an in&e'tment
mana"ement a"reement.
1G. Sukuks! referred to as Islamic 7onds are better described as I'lamic in&e'tment certificate'.
11. %uropean Islamic In(estment 7ank speciali5es in I'lamic trea'!r%, ca(ital mar$et, a''et
mana"ement, trade finance, c#rre'(#ndent ban$in" and (ri&ate ban$in".
1#. -ast emerging fields like HIBA (Gift), WAQF and Al Faraiz (Ineritance) are dealt ith in Islamic
ealth management.
1+. The main difference beteen a 3on(entional and Islamic mutual fund is that the latter does not
in(est in D3" Fu%20
1/. Speculation in an" deal gets in "arar and mai'ir 0
16. -inancial market is related to the fear', #(e', $n#)led"e and "reed of all investors e(er"here.
1:. 'utual fund raises mone" from in(estors to in(est in 't#c$', b#nd' and #ter 'ec!ritie'.
1@. Islamic ealth management originates from the basic I!.a1#c c$%c8" of ealth.
1F. ,ealth management requires thorough research during the three phases of 8&$8& acqu#!#"#$% $5
-a."h@ P&!&=a"#$% $5 -a."h a%2 D#!8$!a. $5 -a."h0
1E. ,ealth has to be earned in an I'lamicall% (ermi''ible )a% .
#G. Sponsor of a Henture 3apital -und 3ontract acts as a M!dareb under a 'udarabah arrangement.
SECTION FOUR
Each 3#" ca&&#! 4 Ma&(! (4) *u!"#$%! + 4 Ma&(! , 7) Ma&(!)
Ch$$! "h c$&&c" -$&2 5&$1 "h &#6h" c$.u1% a%2 #%!&" "h %u13& a6a#%!" "h .5" #% "h
!8ac 8&$=#220
2l-,adiah>:* 1. Irrigation certificates
Abjecti(e-oriented funds>6* #. 2ggressi(e!moderate
S<=<=>E* +. Term used in Pri(ate %quit"! 'utual -unds and Sukuk.
$adith compiled b" 'uslim>/* /. =itab al 'usaqat
'arket oriented funds>1G* 6. Iroth funds
%ssential underl"ing concept of S<=<=>F* :. Safe keeping
T"pes of in(estors in a 'utual -und>#* @. Professional management
2d(antages of in(estment in a 'utual -und>@* F. Transparenc" and clarit" of rights
'usaqa>1* E. Islamic bond
Be(erage>+* 1G. Sector funds
In(estment banking > #G * 11. Inheritance
Islamic ealth management >1:* 1#. -iscal and moral
3ost 7enefit anal"sis >1F* 1+. Intention
Ane of most important Sukuk issues > 1E * 1/. In(esting in equities
Social responsibilit" and accountabilit" >1@* 16. Issued on standalone assets
Portfolio purification > 1#* 1:. $iba! ,aqf and 2l -arai5
2l -arai5 >11* 1@. Islamic ealth management
Pure Ijarah Sukuk > 16* 1F. Determines the best companies to in(est
Ci""ah > 1+* 1E. Dubai Department of 3i(il 2(iation K Ijarah Sukuk
Permissible in(estment (ehicle >1/* #G. %arlier knon as 'erchant banking




SECTION FIVE
Each 3#" ca&&#! 4 Ma&(! (4) *u!"#$%! + 4 Ma&(! , 7) Ma&(!)
S"a" -h"h& "h 5$..$-#%6 a& "&u $& 5a.!0 (D." AP.a!B #% "h !"a&"#%6)
1. Con operating interest income of a target compan" can exceed 64 of total income. > -alse *
#. 2 non 'uslim or a non Islamic bank can engage in trading or in(esting in Shari0ah compliant
in(estments. >True*
+. 'one" can be kept safe to protect its purchasing poer o(er time. > -alse *
/. Sukuk are non tradable Shari0ah compliant capital market products. > -alse *
6. 3on(entional microfinance offers greater resilience than Islamic microfinance. > -alse *
:. 3on(entional microfinance is not for the poorest of the poor. > True *
@. ,aqf is a form of perpetual charit" that entails the use of assets such as cash! land etc.
> True *
F. 2n in(estor has to intensif" his in(estment in (arious t"pes of businesses. > -alse *
E. 'utual funds do not incur huge costs in fees and commission. > -alse *
1G. Sukuk should not be simpl" regarded as a substitute for con(entional interest based bonds.
> True *

11. In(estment bankers can in(ol(e in retail banking also. > -alse *
1#. Islamic fund management is not the onl" solution for 'uslim in(estors. > -alse *
1+. %(er" in(estment deals ith risk. > True *
1/. In in(estments! toda" is ala"s better than "esterda". > True *
16. In(estors exercise no control o(er hat securities the fund bu"s or sells. >True*
1:. Iroth funds concentrate on stocks that are expected to sho short term groth. >-alse*
1@. <nder Shari0ah precepts! a fund manager is permitted to guarantee a fixed return.
> -alse *
1F. <S securities las do not distinguish beteen con(entional and Islamic products. >True *
1E. Trusts shall be deri(ed from the Islamic concept of ealth. > -alse *
#G. Islam has a positi(e (ie toards ealth management and financial planning. >True*

SECTION SI+
Each 3#" ca&&#! 4 Ma&(! (1) *u!"#$%! + 4 Ma&(! , 4) Ma&(!)
P.a! #%2#ca" -h"h& /$u AGREE $& DISAGREE -#"h "h !"a"1%"! 6#=% 3.$- a.$%6 -#"h
:u!"#5#ca"#$%0
1. $iba! ,aqf and 2l -arai5 form part of Islamic las of inheritance. >2gree*

#. The main difference beteen 3on(entional and Islamic 'utual -unds is that the latter prohibit from
in(esting in %quities. >Disagree*
The main difference beteen the 3on(entional 'utual -und and Islamic 'utual -und is that Islam
prohibits from In(esting in Debt -und.
+. Islamic funds are free from risk. >Disagree*
%(er" in(estment deals ith risk. In Islamic funds also there are risks. The risks in Islamic fund are
(arious depending on chosen b" the in(estors. Islam accepts risk as its on but rejects an" kind of
speculations. This is because speculation ma" bring in gharar and maisir.
/. Successful in(esting in(ol(es doing all the things right ignoring serious mistakes. >Disagree*
Successful in(esting in(ol(es doing just a fe things right and a(oiding serious mistakes. It means an
in(estor has to beare. $e has to plan and do the homeork regarding the strength! eaknesses!
opportunities! and threats of the prospect organi5ation. $e or she also has to kno the acti(ities of the
compan". $e has to kno hether the compan" pros or cons the Islamic shariah. $e has to be careful
in each step he mo(es. $e has to a(oid an" serious mistake that ill gi(e big impact to his in(estment.
6. ,hen there are multiple solutions to the problem choose the toughest one. >Disagree*
,hen there are multiple solutions to the problem! choose the simplest one. Sometimes! an in(estor
ill face a serious problem. This problem is usuall" difficult to sol(e. Ance the problem is clearl"
defined! there are multiple solutions to this problem. So! the in(estor ill face the problem in choosing
the solution. 7ased on the prudent concept! the riter suggests the in(estor to choose the simplest
one. 2s an example! if an in(estor confuses hether to in(est in high risk compan" or lo risk
compan"! the high risk compan" offered 64 rate of return but lo risk compan" onl" offers #.64 rate
of return! based on this principle! the in(estor has to rel" on the in(estment hich is more
guaranteed.

:. 2n in(estor should not totall" depend on the last "ear0s achie(ement of the fund. >2gree*
7eare of the last "ear achie(ement. 2n in(estor should not totall" depend to the last "ear
achie(ement of the compan". The situation and en(ironment are ala"s changing. Therefore the past
"ear achie(ement is onl" the basis. It can be used as a rough glance! not totall" depend on it. The
past achie(ement is good for checking the reliabilit" of the internal control of the management! but it
is not good to measure the future prospect.

@. Despite their percei(ed benefits mutual funds ha(e se(eral drabacks like huge costs in fees and
commission. >2gree*
Despite their percei(ed benefits mutual funds ha(e se(eral drabacks like huge costs in fees and
commission unless "ou are bu"ing a Co-Boad 'utual -und.
F. <nlike groth funds! income funds seek to maximi5e immediate returns rather than long term groth.
>2gree*
<nlike groth funds! income funds seek to maximi5e immediate returns! rather than long-term groth.
These ma" be good options if "ou don0t ha(e much mone" to in(est! or if "ou are close to retirement.
E. The existence of a secondar" market pro(ides liquidit" to Sukuk instruments. >2gree*
1G. Sukuk can be issued on all current assets identified on the balance sheet. >Disagree*
These certificates are issued on stand-alone assets identified on the balance sheet. The assets can be
parcels of land to be leased or leased equipment such as aircrafts and ships. The rental rates of returns
on these Sukuk can be both fixed and floating depending on the particular originator.

SECTION SEVEN
Each 3#" ca&&#! 4 Ma&(! (' *u!"#$%! + 4 Ma&(! , 1) Ma&(!)
U%2&.#% "h ;&$%6CI%c$&&c" -$&2 #% "h !"a"1%"! 1%"#$%2 3.$-0
1. The strict rules and regulations made b" Islam are to make sure that 'uslims can operate $u"!#2
the limits.
#. 3ost 7enefit anal"sis is the .a!" in determining hich companies the best are to in(est.
+. The purpose of Islamic finance is to 2#!c$u&a6 'uslims to acti(ate their ealth and a(oiding from
being idle.
/. Cearl" all mutual funds ha(e h#6h in(estment minimums making them accessible to nearl" e(er"
one.
6. F- mutual funds charge expenses hether the" be marketing! management or brokerage fees.