1. www.sii.org.uk IFQ - Islamic Finance Qualification 8 th December 2005 Margaret Spong

2. IFQ - Islamic Finance Qualification Item writing basics

3. Item terminology Item Which ONE of the following statements about options is TRUE? [stem] Responses/options AThe buyer of a call has the right to sell the asset [distracter] BThe seller of a call has the right to buy the asset [distracter] CThe seller of a call has the right to sell the asset [distracter] DThe buyer of a call has the right to buy the asset [key]

4. Item formats ‘Which ONE ….?’ Closed stem ending with a ?; options begin with a capital letter. ‘Liquidity is …:’ Incomplete sentence; stem ends with a colon; options start with lower case and complete the sentence. ‘Which ONE of the following BEST ….?’ MOST/LEAST/BEST format; key must be universally agreed.

5. Incomplete item Liquidity is the degree of ease with which assets can be: A purchased on credit B converted into cash C used as collateral D transferred to other ownership

6. MOST/LEAST/BEST Which ONE of the following BEST describes a straddle ? A A position in two calls, both long B A position in two puts, one long and one short CLong a call and long a put with the strike price on the call being higher that the strike price on the put D A put and a call at the same strike price and with the same expiration

7. Roman numeral format Used for ranking, sequencing and pairing. Stem ‘Which TWO of the following ….? I ……………………… II ……………………. III……………………… IV…………………….. Options AI + II BI + III CII + IV DIII + IV

8. Roman numeral - Pairing A growth stock has which two of the following characteristics? I A high price-earnings ratio II A low price-earnings ratio III A high dividend payout ratio IV A low dividend payout ratio A I and II B I and IV C II and III D II and IV

9. Do - 1 Ensure the stem contains a specific question or statement Ensure the stem includes only one question Move words repeated in each option into the stem Ensure options are parallel Ensure numerical answers are in order of date/size etc Ensure the stem and options are grammatically in tune Remember, some candidates will have industry experience

10. Make sure a question is posed Treasury bills: A mature in one year or less B generally sell above par C are guaranteed indirectly by the full faith and credit of the Federal government D are not subject to Federal income tax Candidates will not know what to do with this item as no question is posed

11. Make sure the question is specific NOTWhich of the following statements are TRUE ? BUTWhich of the following statements about debt securities are TRUE ?

12. Ensure grammatical symmetry NOTIn Moby Dick, Ahab's tragic flaw is symbolised by all of the following EXCEPT : Athrowing his pipe overboard Bthe quadrant that he smashes Cthe baptism of a forged weapon Dthe loss of a leg to the white whale NOTE : All of the responses begin with a present participle EXCEPT A -- the Key.

13. Do - 2 Avoid double negatives! Avoid ‘extreme’ words Avoid extraneous material, it only confuses Avoid complex syntax Avoid options including ‘all of the above/none of the above’ Avoid opposites

14. Avoid double negatives Not All of the following are true about the interest on municipal securities EXCEPT that it is : ANOT exempt from federal income tax Busually paid semi-annually CNOT necessarily exempt from state taxes DNOT generally higher than interest paid on corporate bonds of comparable quality But Which ONE of the following is FALSE regarding interest on municipal securities?

15. Avoid opposites in the options Which ONE of the following types of accounting controls follow the hierarchical lines of authority in a business organisation? ALogical BPreventive CVertical DHorizontal C and D are opposites so selecting one negates the other

16. Do - 3 Avoid jargon, unless common across industry Avoid mutually inclusive answers Avoid hinting at the key by repeating words in the stem in the key Avoid the key being the most precise option Avoid the key being the longest option

17. Avoid mutually inclusive answers All responses must be mutually exclusive, no single response should be contained within another. This can be a problem with numerical items where distracter could include "more than 70%" and "more than 90%".

18. Dos and don’ts – Roman numeral The stem must always be closed Options should be ordered logically Format inappropriate where 1 or 3 options are wrong answers, in this case convert the question to standard format with 1 wrong answer Avoid all options being correct

19. Checking items - 1 Please make sure: The topic is on the syllabus and worth testing The item is answerable in time allowed All the information is in the stem and candidates do not have to read the options to understand the question There is no superfluous wording

20. Checking items - 2 There are no memorable names, candidates remember the question Calculation questions test a formula, not ability to manipulate numbers THERE IS ONLY ONE CORRECT ANSWER RECOGNISED BY THE INDUSTRY

21. Things to think about when writing multiple choice questions - 1 Questions are set out RANDOMLY in the exam, so please make sure the stem clearly identifies the subject area.

22. Things to think about when writing multiple choice questions - 2 The IFQ is intended to be a practical Islamic banking and finance qualification. Please think about the issues staff need to understand and base questions on that – we can expand workbook coverage to handle this if necessary.

23. Things to think about when writing multiple choice questions - 3 Formative and summative questions: -Formative questions cement the knowledge base and are used to reinforce knowledge and understanding in the workbook. -Summative questions are the final assessment and the demonstration of the sum of knowledge and understanding in the exam.

24. Things to think about when writing multiple choice questions - 4 Link to the syllabus: -‘Know’ questions test recall, definitions etc, fairly basic -‘Understand’ questions test comprehension, ability to express material in own language -‘Ability to apply’ questions test ability to apply material to ‘practical’ scenario based questions

25. Things to think about when writing multiple choice questions - 5 Overall paper difficulty. Need consistent standards across all exam papers. Achieve through comparable balance across the difficulty levels of questions, the relative numbers of: -E = easy/basic questions ~80% candidates get them right -M = medium difficulty questions ~40% - 79% correct and -D = difficult questions < 40% correct

26. Things to think about when writing multiple choice questions - 6 E does not necessarily = Know questions D does not necessarily = Ability to apply ************************************************* Paper will comprise: ~63 E questions (>80% of candidates get question correct) ~ 30 M questions (~40 – 79% of candidates get question correct) ~7 D questions (<40% of candidates get question correct) Pass mark 70%

27. Things to think about when writing multiple choice questions - 7 Is question worthwhile? Treat each question as if it is vital to the pass/fail decision. Does the option/question pass the ‘So What!’ test. Don’t test things that don’t really matter.

28. Structuring the paper Technical specification Balance of difficulty Number of calculation questions ‘Theory’ vs ‘practical’ questions Limit on ‘Roman numeral’ style questions Balance in the use of the options A, B, C, D Any other issues specific to the subject?