ExpertMedium2 marksMultiple Choice
ACCA · Question 05 · Business Finance
Section A
Crescent Holdings, a cross-border multinational, wishes to raise $50 million for a new infrastructure project while strictly adhering to Islamic finance principles. They intend to issue financial instruments that represent proportional ownership in the tangible assets of the project, providing investors with a share of the profits generated by those assets.
Which Islamic finance instrument is Crescent Holdings planning to issue?
Section A
Crescent Holdings, a cross-border multinational, wishes to raise $50 million for a new infrastructure project while strictly adhering to Islamic finance principles. They intend to issue financial instruments that represent proportional ownership in the tangible assets of the project, providing investors with a share of the profits generated by those assets.
Which Islamic finance instrument is Crescent Holdings planning to issue?
Answer options:
A.
Mudaraba
B.
Musharaka
C.
Sukuk
D.
Murabaha
How to approach this question
Identify the Islamic equivalent of a bond that represents asset ownership rather than a debt obligation.
Full Answer
C.Sukuk✓ Correct
Sukuk are financial certificates, often likened to bonds, but they comply with Sharia law by representing proportional ownership in an underlying tangible asset, usufruct, or service. Returns to investors are derived from the profit generated by the asset, avoiding Riba (interest).
Common mistakes
Confusing Sukuk with Musharaka. Musharaka is an equity-like joint venture, whereas Sukuk is a tradable certificate backed by specific assets.
Practice the full ACCA FM — Financial Management Practice Exam 4
32 questions · hints · full answers · grading
More questions from this exam
Q01**Section A**
GlobalHealth Initiative is a non-governmental organization (NGO) providing medical...EasyQ02**Section A**
QuantumTech is a highly geared software startup. The central bank of the country w...MediumQ03**Section A**
AgriGrow Co, a large agricultural cooperative, is experiencing cash flow difficult...MediumQ04**Section A**
MetroWater PLC, a public utility company, is evaluating a massive infrastructure p...EasyQ06**Section A**
Titanium Forge PLC, a heavy manufacturing firm, has an equity beta of 1.40. The co...Medium