CME-1 Financial Instruments

Question 1

What is 'sukuk' and how does it differ from a conventional bond?

Accepted Answer

Sukuk represents ownership in an underlying asset or project and pays returns from asset performance, while bonds are interest-bearing debt

Answer

Sukuk and bonds are identical instruments

Answer

Sukuk is equity; bonds are hybrid

Answer

Sukuk is only for government issuers

Question 2

What is the most common structure used for corporate sukuk in Saudi Arabia?

Accepted Answer

Ijara Sukuk (lease-based)

Answer

Murabaha Sukuk

Answer

Mudaraba Sukuk

Answer

Musharaka Sukuk

Question 3

What is an 'Exchange Traded Fund' (ETF) listed on the Saudi Exchange?

Accepted Answer

An open-ended fund whose units trade on the exchange like shares, tracking an index or basket of assets

Answer

A closed-end fund requiring CMA approval for each trade

Answer

A money market fund

Answer

A private equity fund

Question 4

What is a 'derivative instrument' in the context of Saudi capital markets?

Accepted Answer

A financial contract whose value is derived from an underlying asset such as a stock, index, or commodity

Answer

A fixed-income instrument

Answer

A government savings bond

Answer

An Islamic finance product only

Question 5

What does a 'call option' give the holder the right to do?

Accepted Answer

Buy the underlying asset at the strike price before or at expiry

Answer

Sell the underlying asset at the strike price

Answer

Receive dividends only

Answer

Borrow against the asset

Question 6

What is the relationship between bond prices and interest rates?

Accepted Answer

They move inversely: when interest rates rise, bond prices fall, and vice versa

Answer

They move in the same direction

Answer

There is no relationship

Answer

Bond prices only change at maturity