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Home arrow Business & Finance arrow The art of RF (riba-free) Islamic banking and finance

REVIEW QUESTIONS

1. What is the real major revolutionary contributions brought by Islam to the world of finance and monetary theory as stated in the book?

2. Capital can be solicited and raised in the market to finance new projects and expand existing ones. What are the regulatory guidelines that regulate this process of soliciting capital from the public? What entity in the United $tates regulates that process and how?

3. Capital can also be raised from a class of investors who are sophisticated and who can make educated decisions about risks involved in investments. What are these investors called by the regulators? What are their qualifications as stated by the regulators in the United States?

4. Capital can be raised by soliciting companies, governments, and organizations. In what categories and types? Please enumerate the capital market's investment vehicles that can be used.

5. What is the SEC, and what are its responsibilities in the capital markets?

6. What is a private direct investment? Can a private direct investment be structured as an RF investment and how?

7. What is a venture capital (VC) investment? What is the risk level associated with it? How can investors be rewarded for taking this risk?

8. What is the difference between capitalization using a bond issue and a stock/share issue?

9. What is a riba-based bond?

10. What is a government security? What kinds of guarantees and collaterals can a government offer to support a government bond issue?

11. How were bonds used by colonizers to enhance their interests? Please give two country examples and the details on what happened?

12. China and Saudi Arabia are two of the largest holders of U.S. government debt securities/paper (U.S. Treasuries). What happens if China decides to cash off these debt securities? Please share with us the views of Steve Forbes. What is your opinion?

13. What are the different types of riba bonds available in the market?

14. What is a municipal bond? What steps should a municipality or a city follow in order to issue a municipal bond to finance a municipal project like an airport, a water plant, or a highway?

15. What are advantages offered by municipal bonds to investors?

16. What is a corporate bond? If a company is liquidated what is the position of seniority of these bonds compared to government and local taxes and to dividends owed to shareholders?

17. The Catholic Church started with strict prohibition of riba/ribit (the charging of rent for the use of money called usury), then it started relaxing these restrictions. Please discuss what were the motivations that prompted the Church to follow that course of action? How the relaxation was done and the steps followed?

18. How are bonds rated and evaluated in the market? Please explain what a rating agency is. What does a rating agency do? Please discuss the strict regulations necessary to ascertain that the recommendations of these rating agencies are made credible.

19. What is the impact of higher market interest rates on the market value of a bond when liquidated?

20. What is the meaning of a secondary financial market?

21. What is an RF bond, or sukuk? How do these RF sukuk differ from riba bonds?

22. What are the two categories of sukuk?

23. What are the different types of RF financing models used for issuing RF sukuk? Please select three types and explain how these models are used to issue these types of sukuk.

24. What are the conditions used to ascertain that the underlying asset that a sukuk is issued to RF finance are in fact not pledged or encumbered?

25. Trading debt is a very sensitive and highly research issue in RF financing and markets. Please summarize the rules of trading sukuk in the secondary market in order to create liquidity in sukuk markets.

26. What are the RF disciplines and guideline required for investing in a company stock?

27. One of the RF disciplines and required parameters for RF screening of company stocks is the ratio of debt to company value. The company value can be valued using two methods: book value and market value. Please define and then explain the difference between book and market value. What does the book advocate for establishing company value, and why do you think this may be a true expression of RF discipline?

28. What is the Dow Jones Islamic Index? Please explain, and discuss its RF credentials based on what you read in the book.

 
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