1. Shari`ah is commonly divided into two branches of laws, one covering devotional aspects (such as prayer and fasting), and the other covering contractual and civil relationships among people (such as trade and marriage). In the Arabic language these two branches are termed what?
ihsan and ikhlas akhirah and dunya hajiyyat and tahsiniyyat `ibadat and mu`amalat `aqidah and akhlaq
2. When a loan of money is made, does the ownership of money transfer from the lender to the borrower?
yes no only if the borrower agrees only if the money is lost or stolen only if the amount loaned is in excess of one dinar
3. Does shari`ah prohibit double deferment of counter-values in a contract of exchange?
yes no mostly yes, but with some exceptions mostly no, but with some exceptions only in an exchange of money for money
4. The term "murabahah" is used to describe a sale at a specified mark up over the cost incurred by the seller in acquiring the item that is for sale. What term is used to describe sales in which the seller's cost is not specified to the buyer?
muzabanah musawamah mudarabah muqaradah muzayadah
5. Which of the following tests best helps to distinguish between sharikah al-aqd and sharikah al-mulk?
is the partnership a profit-making venture? do the partners share capital losses equally? does the partnership have a defined lifetime? are the partnership activities restricted in scope? do partners have the right to take on debts?
6. In which of the following countries is the bay al-`ina contract widely permitted by national scholars?
Saudi Arabia Kuwait Egypt United Kingdom Malaysia
7. Which of these five definitions most closely defines the Arabic term "usul ul-fiqh"?
Islamic principles principles of Islamic law principles of Islamic contract law Islamic jurisprudence principles of Islamic jurisprudence
8. Which of the following types of Islamic bank account is sometimes held "off balance sheet" ?
Islamic current account Islamic term deposit restricted Islamic investment account unrestricted Islamic investment account Islamic savings account
9. The standards issued by the Accounting and Auditing Organisation for Islamic Financial Institutions in Bahrain cover which main areas of activity?
accounting and auditing accounting, auditing and shari`ah accounting, auditing, shari`ah and capital adequacy accounting, auditing and banking none of the above
10. In which city is the headquarters of the Islamic Financial Services Board?
Bahrain Jeddah Kuala Lumpur London Dubai
11. In which city is the headquarters of the Islamic Development Bank?
Bahrain Jeddah Kuala Lumpur London Dubai
12. When jurists judge a case based on analogy, they try to identify a common factor between the case being judged and a case for which the judgement is already known under Islamic law. What is the Latin term given to this common factor in English law?
ratio decidendi mens rea nemo iudex in causa sua malum prohibitum obiter dictum
13. A traditional murabahah transaction can be developed into a "murabahah to the purchase orderer" transaction by using what device?
a trust account where the ultimate buyer puts collateral a third party guarantee in favour of the Islamic bank a fatwa from a qualified Islamic scholar a promise from the buyer to buy from the Islamic bank a mark-up approximately equivalent to LIBOR
14. Which of the following transactions displays riba al-nasia?
an exchange of good quality for bad quality dates an immediate exchange of unequal amounts of copper an immediate exchange of unequal amounts of gold calling in a loan when the borrower is in difficulty exchange of a $100 note now for ten $10 notes later
15. A nut seller offers a large sack of unshelled nuts for sale to a buyer in return for cash on the spot. The buyer suggests that the seller is engaging in gharar, since some of the nuts may be rotten inside. The seller cracks a few nuts from the sack at random and all are in good condition. Nevertheless, the buyer still objects, saying that the proposed sale involves gharar and is therefore invalid under Islamic law. Is he right in this statement?
yes, because uncertainty remains as to the other nuts no, because gharar does not apply to spot sales no, because the uncertainty involved here is minor no, because uncertainty does not apply to sales of food we cannot know for sure until all nuts have been shelled
16. A lady wishes to buy a car from a showroom but cannot afford the price. The seller is not willing to sell the car on instalments but he does offer to lend her enough money to buy the car so long as she pays back the loan within three months. Is this transaction permitted in Islamic law?
yes yes, if the lady has a mahram with her at contract time yes, if the car has at least three months warranty yes, but only if the loan is interest-free no
17. Which school of Islamic jurisprudence tends to permit the `urboun contract?
Hanbali Maliki Hanafi Shafi`i Jafari
18. Justice Taqi Usmani criticised the use of what technique in the Islamic bond market in his statement on the subject during 2007?
high underwriting fees high profit margins purchase undertakings poor quality religious opinions third party guarantees on coupon payments
19. What technique has commonly been adopted in order to transfer money between debtors and creditors in the Muslim world, often across large distances?
carrier pigeon a wakalah contract a hawala contract a murabahah to the purchase orderer a traditional murabahah
20. The premium paid in return for insurance cover is permitted by many Islamic scholars on the basis that the premiums can be seen as what?
payment for a service by the insurer payment in return for an indemnity by the insurer a donation to a mutual fund a necessity, since insurance cover is essential an equity investment in the insurance company
21. Contract combination is a technique that is sometimes criticised by Islamic jurists on account of which potential weakness?
the excessive fees that it generates for lawyers causing complexity in Islamic financial transactions producing prohibited outcomes from permitted contracts producing permitted outcomes from prohibited contracts gharar in the resulting cash-flows
22. An Islamic bank operates accounts in which depositors share profits made by the bank on its investment operations, and the bank in turn shares the profits of clients into whom it invests. How might this structure best be described?
a two-tier mudarabah a reverse credit-default musharakah-wakalah hybrid a reverse musharakah bay` al-salam bay` mu'ajjal
23. An oil company wishes to finance an extra drilling well on a site that is already producing oil. It suggests to an Islamic bank that the bank pays the company cash now in return for a specified quantity of oil in one year's time, at which time the well is expected to be up and running. In principle, is this transaction valid under Islamic law?
no, there is gharar since oil may not be produced no, since the company is in effect short selling oil no, since oil and money must be exchanged on the spot yes, if a third party guarantees the delivery of oil yes, this is a bay` al-salam contract
24. An investment manager is considering purchasing shares in a company that manufactures farming equipment. Knowing that AAOIFI standards prohibit purchasing shares in a company that uses interest-bearing debt to finance itself, the investment manager investigates the company accounts. What threshold does AAOIFI specify as the maximum permitted amount of interest-bearing debt as a percentage of market capitalisation when undertaking such an investment?
nothing is specified 5% 25% 30% 49%
25. What kind of contract is used when establishing an Islamic current account deposit, according to the majority of Muslim jurists?
a contract of deposit a loan contract a trust an agency a partnership contract