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Hi John,
Need help with Sukuk in Islamic Finance, got totally loss with the technical article specifically focus on Sukuk, with the concepts of Asset-backed and Asset-based; and the exmples given.
The technical article is Islamic Finance.Thanks and best regards,
RickI think everyone got lost on that article – it is ridiculous and I really would not bother about it (it was not written by the examiner). In fact the ACCA had another article written later on Islamic finance in general which is much better and more relevant to the exam.
The best article to read if you want to understand what is needed for Islamic finance is one that is in the F9 list of technical articles (and was in fact written by one of our tutors).
For your information, the only different between asset-based and asset-backed is really only a question of who legally owns the assets, which is really not relevant for the exam.
Thanks a lot!
One more thing, when we are talking about IRR and MIRR, we say IRR/MIRR assumes cash flows being reinvested at IRR/MIRR. What doea it mean?
It isn’t quite that.
Usually, if we are choosing between projects, the best one is the one with the highest NPV.
If we choose the one with the highest IRR as being the best, then that is only really valid if we assume that the inflows are able to be reinvested at the IRR (and will therefore continue to earn the IRR).
For example, if one project has an IRR of 10% and last for 20 years, and another has an IRR of 15% but only lasts for 2 years, you can’t automatically say that the second one is better – it might be better to only get 10% but to get it for 20 years. But, if the returns could be reinvested at 10% or 15% for ever, then the second one would certainly be better. 15% for ever is obviously better than 10% for ever.
However, usually we can’t sensibly assume that the receipts can be reinvested at the IRR, and again therefore the one with the highest NPV is the better.
MIRR is almost a bit of a cheat, but because it assumes that returns can only be reinvested at the cost of capital, then choosing the one with the highest MIRR will come to the same result always as choosing the one with the highest NPV.
I hope that makes some sense – it is difficult to explain the whole thing briefly here. For a fuller explanation (but saying really the same thing) you really need to watch the free lecture.
(In future, please start a new thread when it is a question on a different topic – this question obviously has nothing to do with Sukuk 🙂 (It is because we want our answers to be of benefit to everyone using the website))
Hi John, thanks a lot!
I found the article in F9 yechnical article, and found the fact Ken Garret is the tutor for F8/P3, I’ve seen his name coming out so many times in technical articles, just realised that’s him!
Hi John,
finished my P4 exam today. All went well, except for a silly mistake that I wrongly took the forward rate as the spot rate during futures and options caculation……realised it after I walked put the exam hall.
Felt a bit panic by that moment, then I told myself I’ve demonstrated my understanding on that specific topic, hopefully the I’ll be able to gain the rest marks for my caculation.Still, I’m here not to get comfort but to express my gratitude.
Doing ACCA is one of my best decision made during my university time, and choosing Opentution is another best decision!
Opentuition has been with me for the past two years since I started to take F6 in my second year at university. Now I’m going to graduate and I will work for E&Y after my graduation, thanks to ACCA! (I participated in a case study competition held ACCA China and won the Best Individual Award, that really helped me to develop my professional career. )I understand this is just the beggining of a young guy’s life, especially for a young part-qualied accountant. And I felt so lucky to meet opentuition at the start of my career, the concept Opentuition tries to deliver has deeply embedded into my mind! (The best thing in life is free.)
Thanks John! The moment you started Opentuition you may not realise, that some day in the future, this will change people’s life. It did change my life:)
Ten or twenty years later, when I look back at my university life, my ACCA study experience. I will come to Opentuition and tell those young people, that how lucky they are.
Dear John, you are not just a tutor, for me you are more like a respectful uncle. I would like to thank you for all the efforts, time, and your perseverance.
(Probably I should not post it here, as it’s not relevant to Sukuk, haha. But anyway, I just wanna express my gratitude personally and forgive me this time.)BTW, if you ever come to China, please let me know! Great Chinese food available at any time!
Wish you all the best!
RickThank you very much indeed for your comments 🙂
(and I will not forget your offer of great food 🙂 )
Haha, it may have value as it’s probably an option to expand~When you are doing investnent appraisal for coming to China, my offer will add value to that~Haha
🙂
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