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Capital Adequacy Framework for Islamic Banks known as CAFIB defines market risk as the risk of losses in on- and off-balance sheet positions arising from

Capital Adequacy Framework for Islamic Banks known as CAFIB defines market risk as the risk of losses in on- and off-balance sheet positions arising from movements in market prices. In a conventional banking system, exposure to market risks is through treasury assets only. However, for Islamic financial institutions, market risk can arise from financing assets too.

Clarify and evaluate the possibilities of market risk based on the above statement.

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