Securitization of Debt

Read carefully the paper attached “Securitization of Debt (Bai Al-Dayn)”Your tasks are to judge the soundness of the author’s/speaker’s arguments. show where the author/speaker is uninformed, is misinformed and is illogical? In this paper you simply cannot disagree. You must agree. 1. In your own words, re-write all of section (4. Mitigating financial fragility with Islamic injunctions) starting from mid of page 5 till page 12. 2. Create and write mathematically framework for pricing sukuk [Asset-Backed sukuk] (“Islamic bonds”); (Formalism and Proof) for how (“Asset prices are assumed to follow a Geometric Brownian Motion, where future states are independent of past movements (see Efficient Market Hypothesis - Fama, 1970). The asset dynamics is function of its value appreciation [depreciation] and risk profile across time.23 “ One can include jump processes to asset prices by adding Poisson jumps to the diffusion (Merton, 1976). “
) just focus only on one type of SUKUK which is (Asset-Backed sukuk, for which ratings are dependent on a risk analysis of the asset. However, investors hold rights to underlying assets through SPV and not directly; hence, sukuk performance is driven by assets and not linked to the originator.) Don’t take about Asset-based sukuk only focus on Asset-Backed sukuk. What is Asset-Backed sukuk Ownership: Asset-backed sukuk imply that ownership rights extend to the actual underlying assets such as physical real estate or rights/usufruct from particular intangible but valuable assets. Asset recourse to the investor: Recourse of the investors is to the asset-issuing vehicle, and sukuk investors bear any losses in case of impairment of the sukuk. Rating: Asset-backed rating methodology will be used for the asset-backed sukuk transaction, which involves securitization. Here, credit risk is determined solely by the performance of underlying assets.



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