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UJIAN TENGAH SEMESTER

 

 

 

TUGAS           : RESPON PAPER

JUDUL            : HADGING IN ISLAMIC FINANCE

KARYA           : SAMI SUWAILEEM

KELOMPOK  : 1 /2 / 3  DST

NAMA             :

  1. 1.    ………………….
  2. 2.    ………………….
  3. 3.    …………………..

 

 

CONTENTS

Forward                                                                                              ix

Abstract                                                                                             xi

KELOMPOK 1

  1. I.  Introduction                                                                                                                                                                       13

Risk Dilemma………………………………………………………………………………………………….. 14

Message ofIslamic Finance                                                                                          15

Objective ofthe Paper……………………………………………………………………………………… 15

Organization ofthe Paper                                                                                              16

Note on References………………………………………………………………………………………… 17

Acknowledgement…………………………………………………………………………………………… 17

  1. II.   State of Risk: Volatilities of Financial Markets                                                 19

Stock Markets………………………………………………………………………………………………….. 19

Commodities Markets……………………………………………………………………………………… 22

Currencies Markets…………………………………………………………………………………………. 24

Stability ofFinancial Markets                                                                                         25

 

KELOMPOK 2

III. Derivatives                                                                                                                                                                      27

Structure ofDerivatives…………………………………………………………………………………….. 27

Size ofDerivatives Market                                                                                              28

Futures…………………………………………………………………………………………………………….. 30

Options……………………………………………………………………………………………………………. 31

Strugglefor Legitimacy                                                                                                    32

Economic Debate……………………………………………………………………………………………. 35

Derivatives and Risk……………………………………………………………………………………….. 36

 

KELOMPOK 3

Willingness vs. Ability to Take Risks                                                                           37

Commoditizing Risk………………………………………………………………………………………… 39

Artificial Risks………………………………………………………………………………………………….. 40

Severance ofRisk…………………………………………………………………………………………….. 41

Risk and Time…………………………………………………………………………………………………….. 42

Market Distribution……………………………………………………………………………………………… 42

Law ofLarge Numbers………………………………………………………………………………………… 44

 

KELOMPOK   4

Systemic Risk……………………………………………………………………………………………………… 45

The Two Edges ofDerivatives…………………………………………………………………………….. 47

Limits to Derivatives’ Protection………………………………………………………………………….. 48

Who Ultimatley Bears the Risk?…………………………………………………………………………. 50

Winner and Losers in Derivatives………………………………………………………………………. 51

Risk Dilemma……………………………………………………………………………………………………… 52

 

KELOMPOK 5

IV. The Islamic Approach                                                                 55

Risk in Islamic Economics                                                                                             56

Hedging…………………………………………………………………………………………………………… 57

Tolerable Risk…………………………………………………………………………………………………. 58

Inevitability ofRisk……………………………………………………………………………………………. 58

Causality ………………………………………………………………………………………………………….  60

Investment vs. Gambling                                                                                               61

Choice under Uncertainty                                                                                              62

A Causal Decision Rule                                                                                                 63

Statistical Measure…………………………………………………………………………………………… 65

Derivatives……………………………………………………………………………………………………….. 67

 

KELOMPOK 6 + 1

V.Theory of Gharar                                                                          69

Types of Games………………………………………………………………………………………………. 69

Measure of Gharar…………………………………………………………………………………………… 73

Characteristics ofZero-sum Games                                                                             74

 

KELOMPOK 7+2

Expected vs. Actual Measures                                                                                      77

Risk and Zero-sum Structure                                                                                        79

Two Measures of Gharar                                                                                               82

Value of Risk Management                                                                                           84

KELOMPOK  8+3

VI. Financial Engineering: An Islamic Perspective                      87

Definition and Concept                                                                                                  87

Value of Innovation………………………………………………………………………………………….. 88

Sharıcah and Creativity                                                                                                   89

Regulatory Arbitrage………………………………………………………………………………………. 90

State ofFinancial Innovation                                                                                        91

Principles ofIslamic Financial Engineering                                                              92

Principle ofBalance………………………………………………………………………………………… 92

Interdependence…………………………………………………………………………………………….. 93

Principle of Acceptability                                                                                               95

 

KELOMPOK 9+4

Roots of Prohibited Dealings                                                                                       96

Principle of Integration……………………………………………………………………………………. 98

Integration and Specialization                                                                                     99

Evaluation ofFinancial Products                                                                               100

Principle of Consistency                                                                                              102

Strategies ofProduct Development                                                                          104

Imitation………………………………………………………………………………………………………… 105

Mutation………………………………………………………………………………………………………… 107

Satisfaction…………………………………………………………………………………………………… 108

Conclusion……………………………………………………………………………………………………. 109

 

KELOMPOK 10+5

VII. Islamic Instruments for Hedging                                  111

Economic Hedging……………………………………………………………………………………….. 112

Alignment ofAssets and Liabilities                                                                           112

Natural Hedge………………………………………………………………………………………………. 114

Dynamic Hedging…………………………………………………………………………………………. 115

Cooperative Hedging…………………………………………………………………………………… 116

Cooperative Hedgingfor Currency Risks                                                                118

Bilateral Mutual Adjustment                                                                                       119

Contractual Hedging…………………………………………………………………………………….. 120

 

KELOMPOK  11+12

Mu~d ara bah ……………………………………………………………………………………………….  121

Misreporting Risk………………………………………………………………………………………….. 121

Credit-based Mudarabah                                                                                           122

Capital Risk………………………………………………………………………………………………….. 123

Third Party Hedging……………………………………………………………………………………… 124

Deferred-price Sale………………………………………………………………………………………. 125

Liquidity Risk………………………………………………………………………………………………… 126

 

 

Rate ofReturn Risk……………………………………………………………………………………….. 126

Diversified Deferred Price                                                                                          127

Commodity-linked Bonds                                                                                           129

CurrencyRisk in Muraba~ha                                                                                      130

 

  KELOMPOK  12

Value-based Salam………………………………………………………………………………………. 131

Discussion…………………………………………………………………………………………………….. 132

Liquidity ofSalam………………………………………………………………………………………….. 135

Rate ofReturn Risk……………………………………………………………………………………….. 136

Other Applications of Value-based Salam                                                              136

PayoffStructure of Contractual Hedging                                                                  137

Specialized Institutionsfor Risk Management                                                        138

Summary………………………………………………………………………………………………………. 139

VIII. Conclusion                                                                                                           141