What is the primary prohibition in Islamic finance?
A) Trading of stocks
B) Lending money with interest (Riba)
C) Borrowing funds for personal use
D) Using credit cards
What is the concept of “Riba” in Islamic finance?
A) Profit-sharing in business
B) Interest charged on loans
C) Investment in stocks
D) Charitable donations
Which of the following is allowed in Islamic finance?
A) Selling goods with guaranteed profits
B) Charging interest on loans
C) Profit-sharing based on actual business results
D) Investing in companies that produce alcohol
What is the main purpose of “Mudarabah” in Islamic banking?
A) Selling goods on credit
B) Joint investment with profit-sharing
C) Borrowing funds with interest
D) A guarantee on deposits
Which of the following is true about “Murabaha” in Islamic banking?
A) A partnership arrangement between bank and customer
B) An interest-bearing loan for buying goods
C) A cost-plus financing arrangement where the bank sells an asset to the customer at a markup
D) A type of stock market investment
In Islamic finance, which type of contract is used for asset financing?
A) Mudarabah
B) Ijarah
C) Murabaha
D) Musharakah
What is the key characteristic of “Musharakah” in Islamic finance?
A) Profit-sharing agreement between two or more parties
B) Guaranteed interest rate
C) Borrowing funds for personal use
D) Fixed return on investment
Which of the following is an example of a permissible transaction under Islamic finance?
A) Selling alcohol on credit
B) Investment in ethical stocks
C) Charging excessive fees for services
D) Engaging in gambling transactions
What is the purpose of “Zakat” in Islamic finance?
A) To reduce poverty through mandatory charity
B) To generate profits for banks
C) To promote gambling
D) To charge interest on savings
What does “Takaful” refer to in Islamic insurance?
A) A conventional insurance policy with interest-based returns
B) A community-based insurance model without interest or uncertainty
C) An insurance system based on gambling principles
D) A charity fund for the needy
In Islamic banking, what is the principle of “No Riba”?
A) Charging interest is strictly prohibited
B) Interest may be charged on high-risk loans
C) Borrowing and lending are allowed without restrictions
D) Only government loans can include interest
What is the purpose of “Ijara” in Islamic finance?
A) A loan agreement with fixed interest
B) A lease agreement where the bank purchases and rents the asset to the client
C) A profit-sharing investment model
D) A guarantee for personal loans
What is the meaning of “Halal” in Islamic finance?
A) Permissible and ethical transactions according to Islamic law
B) Investment in stocks with high returns
C) Transactions that are based on speculation
D) Transactions involving interest
Which of the following is prohibited under Islamic finance?
A) Investment in ethical businesses
B) Investment in companies involved in alcohol, gambling, or pork
C) Lending with profit-sharing
D) Trade in non-harmful goods
What is “Sukuk” in Islamic finance?
A) A type of insurance policy
B) Islamic bonds that comply with Shariah law
C) A conventional bank loan
D) A business partnership agreement
Which of the following describes the “Profit-and-Loss Sharing” concept in Islamic finance?
A) Guaranteeing fixed returns to investors
B) Sharing the risk and reward of an investment based on actual results
C) Charging interest on investments
D) Investing in speculative ventures
What is the ruling on investment in “haram” (forbidden) industries under Islamic finance?
A) It is allowed with restrictions
B) It is allowed only for Muslims
C) It is strictly prohibited
D) It is permitted as long as there is no interest involved
Which principle of Islamic banking promotes ethical investing?
A) Charging high interest on loans
B) Profit-sharing based on risk
C) Investment in high-risk speculative ventures
D) Guaranteed returns with interest
What is “Gharar” in Islamic finance?
A) Ethical investment strategy
B) Uncertainty or ambiguity in contract terms or transactions
C) A form of fixed returns investment
D) A charitable donation scheme
Which of the following is a characteristic of an Islamic bank?
A) It operates like conventional banks but with the same interest-based system
B) It charges fixed interest on loans
C) It does not deal in transactions involving interest
D) It invests in speculative ventures
Which financial instrument is considered a Shariah-compliant alternative to conventional bonds?
A) Sukuk
B) Shares
C) Loans with interest
D) Stock options
What is the key difference between “Mudarabah” and “Musharakah”?
A) Mudarabah is a partnership where only one party provides capital
B) Musharakah involves only profit-sharing
C) Mudarabah involves both parties contributing capital
D) Musharakah is a loan-based arrangement
What type of risk is shared in “Mudarabah”?
A) Only the profit is shared
B) Only the capital loss is shared
C) The capital and the profit or loss are shared
D) The risk of interest is shared
What is the Islamic view on insurance?
A) Conventional insurance is permissible
B) Only life insurance is allowed
C) Takaful (Islamic insurance) is permissible as it is based on mutual cooperation
D) Insurance is forbidden in all cases
Which of the following contracts does not involve interest in Islamic banking?
A) Mudarabah
B) Conventional loan agreement
C) Investment in stocks
D) Murabaha financing
Which Islamic finance concept focuses on asset-backed financing?
A) Mudarabah
B) Ijarah
C) Murabaha
D) Sukuk
What is “Zakat” used for in Islamic finance?
A) To generate wealth for banks
B) To provide a welfare system for the community
C) To pay for government services
D) To ensure businesses pay taxes
Which of the following is a principle of Islamic finance?
A) Charging compound interest on loans
B) Profit-and-loss sharing based on risk and effort
C) Guaranteeing a fixed return on all investments
D) Investment in high-risk speculation
