Circle the letter next to the most accurate answer Which of the following principles applies to Islamic banking and finance Prohibition of speculative behaviour Only Sharia approved activities are permissible All profit making is impermissible a and b Islamic banks Pay interest to their depositors Charge interest to their lenders Do not provide financing without collateral Base their investing criteria on the investment potential of the project and not just on collateral Which of the following is a characteristic that differentiates Islamic banks from conventional banks The absence of interest in all financial dealings Making profit from trade Allocation of funds to areas that increase economic activity and benefit society Provide home financing via mortgages Islamic banks Base their investment decisions entirely on the collateral submitted by the client Base their investment decisions on the investment potential of the project and not just on collateral May accept interest on their liabilities but donate it to charity Both a and c Applying Islamic finance principles means Islamic banks cannot provide lines of credit that bear interest Islamic banks can make money out of money No restriction on speculative behaviour Avoiding all kinds of risks by the Islamic bank The main objective of Islamic banks is to Provide funds for Muslims Make maximum profits for shareholders Finance building of Masjids and other Muslim religious institutions Provide an alternative to interest based banking The main objective of Islamic banks is to Ensure Halal activities are not financed Finance the building of Islamic schools and colleges Provide Riba free banking products and services Develop the retail and consumer banking in Muslim countries Which statement below does not apply to an Islamic bank Does not charge interest on funds given as loans Does not pay interest to its depositors Provides collateral free loans to Muslims only Ensures no Haram business activity is financed Which of the following is a Shariah rule applied to Islamic banking Selling money for money is permitted Any profits made are not permitted A deferred sale at a price higher than the cost is not permitted A deferred sale at a price higher than the cost is permitted The main Islamic banking products are Musharaka, Mudaraba and Murabaha Ijara and Istisna Salam All of the above An Islamic bank is a business, and so must make profit Which of the statements below best explains the mechanism by which the Islamic bank earns profit The Islamic bank charges a low interest on loans, and thus remains profitable without overcharging its clients The Islamic bank charges a competitive fee on loans and most of its profit comes from the fees The Islamic bank finances various needs of customers, linked to assets, on the basis of sale, leasing or partnership and earns a share of the profit from the transaction The Islamic bank does not lend money but instead acts as an agent between seller and buyer and receives a fee for its services Sharia compliant sales contracts have three requirements Which of the following is not one of them Assets need to be in existence Sales profit should be reasonable Owner should own the asset Asset should be in physical or constructive possession of owner Abdulla agrees to sell his house to Ahmed at the market price Is the sale valid under Islamic finance Yes, the sale is valid because it is not fair that Abdulla loses money should the market price go up At the same time, it is not fair that Ahmed pays too much for the house should the market price go down No, the sale is not valid because Abdulla and Ahmed did not sign a written bilateral contract agreement specifying this condition Yes, the sale is valid because both Abdulla and Ahmed agree to this condition and therefore they enter into a bilateral contract agreement No, the sale is not valid because the specific price has to be stated under the Islamic finance contract requirements Rafe took a loan of 10,000 from Helen for a small business The business incurred a loss and the capital reduced to 5,000 Can Rafe ask Helen to share in the loss Which statement below is the best answer Yes, because Rafe took the loan for the growth of his small business Rafe does not have to pay the full amount back to Helen Yes, because in Islamic finance two parties always share the profit and loss because it is just and fair Rafe does not have to pay the full amount to Helen No, because the transaction between the two of them is that of a loan and not any form of partnership Rafe is liable to pay 10,000 to Helen No, because the transaction between the two of them was not recorded by the Shariah Supervisory Board Rafe is liable to pay 10,000 to Helen In Badr's grocery store there is surplus flour currently He decides not to sell it now and to do so in the future, when there is a deficit of flour, so he can make a higher profit Is this transaction acceptable under the principles of Islamic economics Why Yes, because taking advantage of a deficit of goods will result in higher profits for Badr Yes, because Badr speculates for changes in commodity supply, which is a proper business risk he is taking No, because Badr is hoarding food, and hoarding food and other necessities is unlawful under Islamic economics No, Badr is making the decision based on the issues of supply and demand of flour, which is unacceptable in Islamic economics Noor purchased 1,000 bags of sugar from Islamic Bank on credit While transporting the bags to her factory, the sugar was destroyed by heavy rains Choose the statement that correctly explains who bears the loss Noor bears the loss because she is the owner of the goods Noor bears the loss because she was transporting the goods at the time of the rain Islamic Bank bears the loss because it is the owner of the goods sold to Noor on credit Islamic Bank bears the loss because the heavy rains were an act of God and nature, and there was no insurance in place to cover the loss of the goods As per the OIC Central Bank Governors declaration of 1982, which one below is not an aspect of the relationship between central banks and Islamic banks Lender of last resort Supervisor regarding monetary policy Shariah supervisory Clearing house Which international IFI is based in Dubai LMC IFSB IICRCA GCIBFI The key function of the IIFM is to Creat an interbank money market Set up accounting standards Mediate in IFI disputes Develop, regulate and promote Islamic capital and money markets

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Circle the letter next to the most accurate answer. Which of the following principles applies to Islamic banking and finance? Prohibition of speculative behaviour Only

Circle the letter next to the most accurate answer.

Which of the following principles applies to Islamic banking and finance?

Prohibition of speculative behaviour
Only Sharia-approved activities are permissible
All profit-making is impermissible
a and b

Islamic banks:

Pay interest to their depositors
Charge interest to their lenders
Do not provide financing without collateral
Base their investing criteria on the investment potential of the project and not just on collateral

Which of the following is a characteristic that differentiates Islamic banks from conventional banks?

The absence of interest in all financial dealings
Making profit from trade
Allocation of funds to areas that increase economic activity and benefit society
Provide home financing via mortgages

Islamic banks:

Base their investment decisions entirely on the collateral submitted by the client
Base their investment decisions on the investment potential of the project and not just on collateral
May accept interest on their liabilities but donate it to charity
Both a and c

Applying Islamic finance principles means:

Islamic banks cannot provide lines of credit that bear interest
Islamic banks can make money out of money
No restriction on speculative behaviour
Avoiding all kinds of risks by the Islamic bank

The main objective of Islamic banks is to:

Provide funds for Muslims
Make maximum profits for shareholders
Finance building of Masjids and other Muslim religious institutions
Provide an alternative to interest-based banking

The main objective of Islamic banks is to:

Ensure Halal activities are not financed
Finance the building of Islamic schools and colleges
Provide Riba-free banking products and services
Develop the retail and consumer banking in Muslim countries

Which statement below does not apply to an Islamic bank:

Does not charge interest on funds given as loans
Does not pay interest to its depositors
Provides collateral-free loans to Muslims only
Ensures no Haram business activity is financed

Which of the following is a Shariah rule applied to Islamic banking?

Selling money for money is permitted
Any profits made are not permitted
A deferred sale at a price higher than the cost is not permitted
A deferred sale at a price higher than the cost is permitted

The main Islamic banking products are:

Musharaka, Mudaraba and Murabaha
Ijara and Istisna
Salam
All of the above

An Islamic bank is a business, and so must make profit. Which of the statements below best explains the mechanism by which the Islamic bank earns profit?

The Islamic bank charges a low interest on loans, and thus remains profitable without overcharging its clients
The Islamic bank charges a competitive fee on loans and most of its profit comes from the fees
The Islamic bank finances various needs of customers, linked to assets, on the basis of sale, leasing or partnership and earns a share of the profit from the transaction
The Islamic bank does not lend money but instead acts as an agent between seller and buyer and receives a fee for its services

Sharia-compliant sales contracts have three requirements. Which of the following is not one of them?

Assets need to be in existence
Sales profit should be reasonable
Owner should own the asset
Asset should be in physical or constructive possession of owner

Abdulla agrees to sell his house to Ahmed at the market price. Is the sale valid under Islamic finance?

Yes, the sale is valid because it is not fair that Abdulla loses money should the market price go up. At the same time, it is not fair that Ahmed pays too much for the house should the market price go down
No, the sale is not valid because Abdulla and Ahmed did not sign a written bilateral contract agreement specifying this condition
Yes, the sale is valid because both Abdulla and Ahmed agree to this condition and therefore they enter into a bilateral contract agreement
No, the sale is not valid because the specific price has to be stated under the Islamic finance contract requirements

Rafe took a loan of 10,000 from Helen for a small business. The business incurred a loss and the capital reduced to 5,000. Can Rafe ask Helen to share in the loss? Which statement below is the best answer?

Yes, because Rafe took the loan for the growth of his small business. Rafe does not have to pay the full amount back to Helen
Yes, because in Islamic finance two parties always share the profit and loss because it is just and fair. Rafe does not have to pay the full amount to Helen
No, because the transaction between the two of them is that of a loan and not any form of partnership. Rafe is liable to pay 10,000 to Helen
No, because the transaction between the two of them was not recorded by the Shariah Supervisory Board. Rafe is liable to pay 10,000 to Helen

In Badr's grocery store there is surplus flour currently. He decides not to sell it now and to do so in the future, when there is a deficit of flour, so he can make a higher profit. Is this transaction acceptable under the principles of Islamic economics? Why?

Yes, because taking advantage of a deficit of goods will result in higher profits for Badr
Yes, because Badr speculates for changes in commodity supply, which is a proper business risk he is taking
No, because Badr is hoarding food, and hoarding food and other necessities is unlawful under Islamic economics
No, Badr is making the decision based on the issues of supply and demand of flour, which is unacceptable in Islamic economics

Noor purchased 1,000 bags of sugar from Islamic Bank on credit. While transporting the bags to her factory, the sugar was destroyed by heavy rains. Choose the statement that correctly explains who bears the loss.

Noor bears the loss because she is the owner of the goods
Noor bears the loss because she was transporting the goods at the time of the rain
Islamic Bank bears the loss because it is the owner of the goods sold to Noor on credit
Islamic Bank bears the loss because the heavy rains were an act of God and nature, and there was no insurance in place to cover the loss of the goods

As per the OIC Central Bank Governors declaration of 1982, which one below is not an aspect of the relationship between central banks and Islamic banks?