Test Your Islamic Finance Knowledge With The Auscif’s Quiz

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| By Almircolan

Almircolan

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Quizzes Created: 2 | Total Attempts: 7,368

Questions: 15 | Attempts: 6,807 | Updated: Aug 18, 2023

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Test Your Islamic Finance Knowledge With The Auscifs Quiz - Quiz

Islamic finance quiz consists of true/false questions. You must answer each question before you go to the next one. All answers are final. You will not be able to go back or skip questions.

Questions and Answers

1.

One of the core aims or objectives (maqasid) of the Shariah is the preservation of Wealth (Maal).
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
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.

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6
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2.

Subject matter in a contract can not be anything that is not tangible. (Eg: usufruct (benefit from someone else's property) which is commonly found in a lease agreements)
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
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.

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3
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3.

It is permissible to sell a commodity before it comes under our control or we take (actual or constructive) possession of it. (Excluding Salam and Istisna arrangements)
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
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.

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3
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4.

Offer and acceptance are non-essential attributes of the contract and if they are missing then the contract can not be described as Void (batil).
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
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.

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2
1
5.

It is permissible to have contract that combines contracts of sale and lease if they refer to the same asset (e.g. Hire Purchase contracts with e.g. a lease for 3 years and sale at 30% at the end of the lease period).
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
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.

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2
0
6.

According to shari'ah, anything that has economic value is considered wealth.
- A.
  
  False
- B.
  
  True
Correct Answer
A. False

Explanation
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.

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3
0
7.

Riba al-Fadl refers to a delay in the settlement of one or both counter-values.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
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.

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1
0
8.

Exchanging US$105 with AUD$100 on the spot (hand to hand, without delay) is permissible.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
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.

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2
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9.

Buying a house for eg. $450,000 (to be paid in instalments over 5 years) is a permissible arrangement.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
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.

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1
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10.

Late fees are permissible as long as they are mutually agreed to at the start of a contract.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
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.

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1
0
11.

Gharar refers to uncertainty and deception (amongst other things).
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
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.

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2
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12.

In Musharaka (joint venture), the profit ratio is fixed according to capital contribution, while loss ratio can be negotiated, but, must be fixed at the start.
- A.
  
  False
- B.
  
  True
Correct Answer
A. False

Explanation
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.

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1
0
13.

In musharaka, partner who invest eg. $50,000 (or 10% of total investment capital) has right to specify from the beginning that his share of profit will be $5,000 per year (which equals to 10% of his initial contribution).
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
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.

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3
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14.

The result of a sale transaction is instant and results in an absolute transfer of the (asset) ownership.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
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.

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2
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15.

Buying shares (stock) on a short term price fluctuations is considered speculation (rather than investment) and thus is a prohibited trading practice.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
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.

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2
0

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Current Version
Aug 18, 2023

Quiz Edited by
ProProfs Editorial Team
Jan 01, 2014

Quiz Created by
Almircolan

Test Your Islamic Finance Knowledge With The Auscif’s Quiz

One of the core aims or objectives (maqasid) of the Shariah is the preservation of Wealth (Maal).

Subject matter in a contract can not be anything that is not tangible. (Eg: usufruct (benefit from someone else's property) which is commonly found in a lease agreements)

It is permissible to sell a commodity before it comes under our control or we take (actual or constructive) possession of it. (Excluding Salam and Istisna arrangements)

Offer and acceptance are non-essential attributes of the contract and if they are missing then the contract can not be described as Void (batil).

It is permissible to have contract that combines contracts of sale and lease if they refer to the same asset (e.g. Hire Purchase contracts with e.g. a lease for 3 years and sale at 30% at the end of the lease period).

According to shari'ah, anything that has economic value is considered wealth.

Riba al-Fadl refers to a delay in the settlement of one or both counter-values.

Exchanging US$105 with AUD$100 on the spot (hand to hand, without delay) is permissible.

Buying a house for eg. $450,000 (to be paid in instalments over 5 years) is a permissible arrangement.

Late fees are permissible as long as they are mutually agreed to at the start of a contract.

Gharar refers to uncertainty and deception (amongst other things).

In Musharaka (joint venture), the profit ratio is fixed according to capital contribution, while loss ratio can be negotiated, but, must be fixed at the start.

In musharaka, partner who invest eg. $50,000 (or 10% of total investment capital) has right to specify from the beginning that his share of profit will be $5,000 per year (which equals to 10% of his initial contribution).

The result of a sale transaction is instant and results in an absolute transfer of the (asset) ownership.

Buying shares (stock) on a short term price fluctuations is considered speculation (rather than investment) and thus is a prohibited trading practice.