question

The structure of any financial system can be classified into one main category, that is the financial market.

answer

False, it is also known as capital markets.

question

Al-Ijarah Thumma Al-Bay is a leasing (Ijarah) contract with a condition to sell (bay')

answer

False. No condition to sell, it must be a promise.

question

In a Musharakah agreement, the distribution of profits and losses but be done strictly according to capital contribution ratios.

answer

False. It is not based on capital contributions.

question

Bank has discretion to provide gifts or bonuses either in cash or in kind to the Wadi'ah Yad Dhamanah and Mudharabah depositors.

answer

False. In Mudharabah it is profit and loss sharing, no gifts or bonuses are given.

question

In Musharakah contract, profit and loss are being determined at the conclusion of the contract based on any mutually agreed ratio.

answer

False. The agreement of the contract, not the conclusion.

question

Bank ABC indicates a rate of potential profit to be given to General Investment Account Holder, but clearly states that it is only "indicative rate" and may change according to actual profit made. This practice is totally Shariah compliant.

answer

True.

question

In applying Murabahah as a mode of financing, many Islamic banks adopt the conventional interest rate as a benchmark in determining their profit rates. This practice is Shariah compliant.

answer

True. As long as contract elements are sharia compliant

question

Under the concept of diminishing partnership in home ownership home buyer and the bank jointly acquire and own the property. The bank leases the bank's share of the property to the home on the basis of ijarah.

answer

True. The Bank does lease its share of the property on the home based off of Ijarah.

question

Prohibited elements such as riba and maysir (gambling) are absent in takaful. However, the element of gharar is still present in the takaful contract.

answer

True. But tolerated in unilateral charitable contracts.

question

The main purpose of a sale and leaseback arrangement is to finance the purchase of a specific asset or property.

answer

False. To get cash

question

Bay' Bithamin Ajil (BBA) floating rate implies that both ceiling profit rate and effective profit rate are adjustable to the actual market rate.

answer

False. Only effective profit rate reflects market rate.

question

From the fiqh perspective, for the financing of the purchase of houses under construction, the contract of Istisna'a is more suitable than the contract of bay' Bithaman Ajil (BBA).

answer

True.

question

In principle, Murabahah financing is to enable customers to get funds to purchase assets, as well as to pay wages and salaries, overheads, maintenance expenses and other working capital related costs.

answer

False. Only commodities and assets.

question

Debit card functions the same way as credit card, except that for debit card, the cardholder is only allowed to charge up to actual amount of cash held in account.

answer

True.

question

Under Wadi'ah yad dhamanah contract deposited property must be kept separately. There is no pooling of funds.

answer

False. deposits need not be segregated

question

In Al Rahn, the source of profit for the Murtahin is the service or administrative fees for the Qardhul Hassan (benevolent loan).

answer

False. Custodial fee/Storage costs

question

In Ijarah contract, the lessor is allowed to review the rent at specified intervals, particularly for long term leases.

answer

True. As long as it states in contract mutually agree

question

In Murabahah contract, the cost and mark-up prices need not necessarily be disclosed.

answer

False. Have to disclose the cost and the profit mark up.

question

Participation in the stock market is similar to gambling (Maysir) therefore Muslims should avoid the buying and selling of shares.

answer

False. Shares are not gambling, investing is shariah compliant.

question

In a Mudarabah Investment account, the bank does provide a guarantee that the deposited (invested) funds will be completely safe (that is the bank does provide capital protection).

answer

False. Contractually the deposited amount is not guaranteed (no capital protection).

question

The Shariah prohibition of Riba implies that Islam does not recognize any time value of money.

answer

False. Shariah does recognize TVM (Time Value Money). Time is a valuable economic resource.

question

Expertise and skill in equity investment and management is not an important issue for Mudharabah/Musharakah financing.

answer

True. All partners have the right to participate in the business or trade no matter their qualification. However, it should be taken into consideration the skill sets of each individual participating in the business.

question

Islamic bank are allowed to provide a rebate in case of early repayment in Bay' Bithaman Ajil (BBA) contract.

answer

True. In a BBA floating rate financing banks are granted to give rebates for early settlement or redemption.

question

In Al-Rahnu, the Murtahin is allowed to use the pledged asset in the event that the pledger does not re-pay the Qardhul Hassan loan within the agreed time period.

answer

False. Can auction assets

question

Juristic differences on Bay-Al 'Inah issue on credit cards centers on the issue of early settlement.

answer

False. Acceptability as sale

question

The usage of Islamic credit card should be encouraged, since it fulfills all the Shariah requirements and it facilities the payment of goods and services.

answer

False. Unresolved fiqh issues. Islamic perspective on debts.

question

One of the key features under the Mudarabah contract is that in the event of loss, both the Rabbal-mal and the Mudarib must bear the capital loss.

answer

False. Only Rabbal-mal bears the loss

question

In a pure Wakalah model of Takaful some part of the underwriting surplus is given to the operator. However, the underwriting loss if any has to be borne by the participants only.

answer

False. It is given to the operator depending on performance.

question

In a Salam contract both the price and delivery of goods are postponed to a future date.

answer

False. In a Salam contract the price is paid in advance and delivery of goods is at a future date.

question

In Murabahah contract, the cost and mark-up prices need not necessarily be disclosed

answer

False. In Murabahah contract is a contract of sale where the seller discloses to buyer actual cost of the commodity and the profit margin added.

question

Under Musharakah/Mutanaqisah arrangement financier and customer participate in joint ownership of property or commercial enterprise with the objective of permanently owning and managing the enterprise together.

answer

False. Diminishing partnership.

question

In Al Rahnu the source of profit for the Murtahin is the service or administrative fees for the Qardhul Hassan (benevolent loan).

answer

False. The source of profit for the Murtahin is the storage costs.

question

The use of conventional interest rates as the benchmark to determine the profit rate in a Murabahah financing arrangement does not make that Murabahah contract invalid.

answer

True. As long as the Murabahah contract is Shariah compliant and agreed by both parties it remains valid.

question

In Itisna' contract the required materials can be purchased by either the manufacturer or the purchaser.

answer

False. Materials are only to be bought by the manufacturer, not the purchaser.

question

In Wakalah model of Islamic credit card, bank earns profit from mark up on deferred sale

answer

True.

question

In Al-Rahnu the Murtahin is allowed to use pledged asset in event that pledger doesn't pay the benevolent loan within agreed time.

answer

False? Can auction asset.

question

Juristic differences on Bay al-'inah issue on credit cards centers on issue of early settlement.

answer

False. Acceptability as sale, etc.

question

Usage of Islam credit card should be encouraged; since it fulfills all Shariah requirements and facilitates payment of goods and services.

answer

False. Unresolved Fiqh issues, Islam perspective on debt.

question

One of the key features of Mudarabah contract is that in the event of loss both the rabbal-mal and mudarib bear capital loss.

answer

False. Only Rabbal-mal.

IBF True/False Questions – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards