Exercise Chapter 6 BOP

Uncertainty can be quantified and used for rational decision-making.

• True

• False

From an Islamic perspective, essential risk (business risk) is inherent in all business transactions and is necessary to reap profit.

• True

• False

Business risk is solely related to factors affecting the financial markets.

• True

• False

Displaced Commercial Risk (DCR) occurs when a bank is forced to use shareholders' funds to pay depositors a competitive return to prevent them from withdrawing their funds.

• True

• False

In a murabahah contract, the credit risk for the bank is eliminated once the goods are delivered.

• True

• False

Operational risk is a well-defined and narrow concept that only includes technology failures.

• True

• False

Rate of Return Risk (RORR) is a type of credit risk linked to the potential default of a counterparty.

• True

• False

Fiduciary risk for an Islamic bank includes the duty to keep risks from investment deposits separate from those of demand deposits.

• True

• False

Reputation risk for an Islamic Financial Institution can be triggered by Shariah non-compliance.

• True

• False

Systematic risk can be completely eliminated through a well-diversified portfolio.

• True

• False