Sukuk Isfahan and Istaghar each has a par value of RM100 per unit. Both sukuk pay profit rate of 10% and are payable on a semi-annual basis. While sukuk Isfahan has 5 years to maturity, sukuk Istaghar has 10 years to maturity. They both are traded at par value currently.

a) Measure the yield to maturity for both sukuk.

b) Test for both sukuk valuation if interest rate suddenly increases by 2% and will have some direct impact to the current profit rate.

c) Contrast both sukuk by highlighting a better security.

d) Identify THREE (3) reasons for a sukuk to be Shariah non-compliant.

e) Following the statement of Sheikh Muhammad Taqi Usmani in February 2008 that 85% of Gulf sukuk do not comply with Islamic Law (Shariah), recommend TWO (2) necessary actions to improve its compliance.