Test Your Islamic Finance Knowledge With The Auscif’s Quiz

Gharar is a term used in Islamic finance to refer to uncertainty or ambiguity in a contract. It is considered undesirable because it can lead to deception or unfairness. Therefore, the statement that Gharar refers to uncertainty and deception is true.

Buying a house for $450,000 and paying for it in instalments over 5 years is a permissible arrangement. This means that it is allowed or acceptable to purchase a house in this manner.

In a sale transaction, the result is instant and leads to the absolute transfer of ownership of the asset. This means that once the sale is completed, the buyer becomes the rightful owner of the asset, and the seller no longer has any claim or control over it. There are no conditions or contingencies attached to the transfer, making it a definitive and final change in ownership. Therefore, the statement "True" accurately describes the outcome of a sale transaction.

Exchanging US$105 with AUD$100 on the spot is permissible because the exchange rate between the US dollar and the Australian dollar is favorable. This means that the US dollar has a higher value compared to the Australian dollar, allowing for a higher exchange rate. Therefore, exchanging US$105 for AUD$100 would result in a favorable exchange rate for the individual.

Offer and acceptance are essential elements of a contract. Without these elements, a contract cannot be formed. If either the offer or acceptance is missing, the contract would be considered voidable or void depending on the circumstances.

According to the statement, it is not permissible to sell a commodity before it comes under our control or we take possession of it. This means that one cannot sell something that they do not have ownership or control over. Therefore, the correct answer is False.

The preservation of wealth (Maal) is indeed one of the core aims or objectives (maqasid) of the Shariah. This means that Islamic law seeks to protect and safeguard people's wealth, ensuring that it is not unjustly taken or wasted. This is in line with the principles of fairness and justice in Islam, as wealth is considered a blessing from God and should be used and distributed in a responsible and ethical manner. Therefore, the statement "True" accurately reflects this aspect of Shariah.

Buying shares on short-term price fluctuations is considered speculation because it involves making investment decisions based on short-term market trends and price movements, rather than on the long-term fundamental value of the company. Speculation is a higher-risk trading practice compared to long-term investing, as it relies on predicting short-term market movements, which can be unpredictable and volatile. Therefore, buying shares for short-term price fluctuations is generally not considered a sound investment strategy and is often prohibited by trading regulations.

In a Musharaka or joint venture agreement, both profit and loss ratios are typically negotiated and agreed upon by the parties involved. While the profit ratio may indeed be based on the capital contributions of each partner, the loss ratio is not necessarily fixed at the start and can also be subject to negotiation and agreement. Therefore, the statement that the loss ratio must be fixed at the start is false.

In musharaka, partners who invest in the business have an equal right to share in the profits and losses of the venture. They do not have the right to specify a fixed amount of profit from the beginning. Instead, the profit distribution is based on their respective contributions to the total investment capital. Therefore, the statement that a partner can specify a fixed amount of profit is false.

Riba al-Fadl refers to the prohibition of unequal exchange of goods of the same type but different quantities. It does not refer to a delay in the settlement of counter-values. Therefore, the correct answer is False.

The statement is false because the subject matter in a contract can include both tangible and intangible things. Usufruct, which is mentioned as an example, is an intangible right that can be included in a lease agreement. Therefore, the subject matter in a contract is not limited to tangible things.

It is not permissible to have a contract that combines contracts of sale and lease, even if they refer to the same asset. The reason for this is that a sale contract and a lease contract are two distinct legal agreements with different rights and obligations for the parties involved. Combining them would create confusion and potentially lead to legal disputes. Therefore, the statement is false.

According to shari'ah, not everything that has economic value is considered wealth. Shari'ah defines wealth as something that is tangible and has a specific value, such as money, gold, or property. However, intangible things like knowledge, skills, or services are not considered wealth in shari'ah. Therefore, the statement "anything that has economic value is considered wealth" is false according to shari'ah.

Late fees are not permissible as long as they are mutually agreed to at the start of a contract. Late fees must be reasonable and in line with applicable laws and regulations. If a late fee is deemed excessive or unfair, it may be considered unenforceable. Therefore, the statement is false.