Islamic Banking Multiple Choice Questions | Islamic banking mcqs
1. Islamic Finance is strongly _____ oriented.
(A) profit
(B) money
(C) equity
(D) interest
2. In Islamic Finance, the owner of capital _____ the profits made by the entrepreneur.
(A) can share
(B) cannot share
(C) receive
(D) can never take
3. The Islamic financial system regards “the time value of money” as
(A) interest
(B) rent
(C) loss
(D) profit
4. The Islamic financial system regards “the monetary value of time” as
(A) interest
(B) profit
(C) loss
(D) rent
5. In Sharia law and Islamic financing, “making money from money” is
(A) permitted
(B) not permitted
(C) permitted in certain cases
(D) permitted for Islamic banks only
6. The Islamic financial system works on the basis of
(A) sharing return
(B) sharing risk
(C) sharing risk and return
(D) predetermined risk and return
7. In Islamic banking and finance, any deal must have an underlying _____ backing the deal.
(A) asset
(B) profit
(C) risk
(D) currency
8. A “sukuk” is basically a Shariah-compliant
(A) loan
(B) profit
(C) bank cheque
(D) investment certificate
9. “Takaful” is basically a Shariah-compliant
(A) loan
(B) insurance
(C) investment
(D) ownership
10. Which from the following is/are NOT permitted under Islamic Financial Principles?
I. Interest
II. Short selling
III. Non-asset backed derivatives
(A) I only
(B) I and II
(C) I and III
(D) I, II and III
11. What is asset side financing out of these means
a. large enterprise financing
b. import financing
c. Letter of credit with margin (for musharika)
d. all of answers are correct
Answer: b
12. Giving share of investor to customer on lease is the
a. basis of musharika
b. basis of diminishing musharika
c. basis of ijarah
d. basis of hibah
Answer: b
13. An agreement in which advance fee is made for commodities to be delivered afterwards on is
a. murabaha
b. baisalam
c. ijarah
d. b& c
Answer: d
14. Word Musharika is originated from Arabic word Sharikah meaning
a. friends
b. ijarah
c. lessor
d. partnership
Answer: d
15. A most ordinary kind of Shirkat-ul-Aqd where equality in capital, management or liability might be identical in one case but not in all respect meaning either profit is equal but not labour or vice versa is
a. shirkat-ul-aqd
b. shirkat-ul-ainan
c. shirkat-ul-dain
d. shirkat-ul-milk
Answer: b
16. Working capital financing in Musharika is
a. liability side financing
b. asset side financing
c. assets
d. liabilities
Answer: b
17. Where everyone partner contribute some capital into a commercial venture is
a. partnership in capital
b. shirkat-ul-amwal
c. a & b
d. shirkat-ul-abdan
Answer: c
18. Investments given by all partners/shareholders known to as
a. partners
b. ijarah
c. murabah
d. takaful
Answer: a
19. Mutually or equally using an asset by taking twists under conditions where partners or joint vendors are on superior stipulations is
a. musharikaintifa
b. musharika
c. ijarah
d. hibah
Answer: a
20. Sharikah is chief term than
a. ijarah
b. murabaha
c. musharika
d. shirkat-ul-ainan
Answer: c
21. The term Riba literally means
a. Any speculation
b. Any excess
c. Any profit
d. Any wealth
Answer: b
22. The term Hawalah refers to a contract of
a. Profit loss sharing
b. Repayment of loans
c. Assignment of debt
d. Profit sharing
Answer: c
23. Deposits placed with banks practically take the form of
a. Donations from depositors to the bank
b. A sale contracts with the bank
c. Authority to the bank to lent monies
d. Loans from depositors to the bank
Answer: d
24. The Islamic financial system is founded on
a. Cancellation, revocation of debt
b. Absolute prohibition of the payment or receipt of any predetermined, guaranteed rate of return
c. Imposition of an obligatory tax on earnings
d. Land and property tax levied by the state
Answer: b
25. Ijarah literally means
a. Price of goods
b. Type of transaction
c. Risk or loss or fraud
d. To give something on rent
Answer: d
26. The term Waqf refers to
a. Bill of exchange
b. What is due to the state treasury
c. Promissory note
d. Charitable foundation or trust
Answer: d
27. The Arabic term Kafil means
a. A person taking possession of goods
b. A person taking delivery of goods
c. A person providing surety
d. A person withholding delivery of goods
Answer: c
28.What does the abbreviation IFI stand for in Islamic banking?
a. Islamic Forum for Intermediation
b. Islamic Finance Industry
c. Islamic Financial Instrument
d. Islamic Financial Institution
Answer: d
29. Islamic corporate governance promotes
a. Currency reserves
b. Ethical and moral behaviour
c. Debt whose repayment is postponed
d. Specialised large-scale commercial institutions
Answer: b
30. The term Dhaman in Islamic commercial law refers to
a. Islamic banking operations
b. Several types of Islamic financial transactions
c. The taking on of a liability or responsibility of another person
d. Commercial activities of Islamic banks
Answer: c
31. Sukuk is Arabic name stand for
a. financial liabilities
b. financial certificates
c. financial assets
d. financial loans
Answer: b
32. A type of partnership where one party offer funds while other gives expertise and management is
a. murabaha
b. musharika
c. ijarah
d. mudarabah
Answer: d
33. Word Musharika is originated from the
a. latin word
b. arabic word
c. persian word
d. french word
Answer: b
34. Which is liability side financing out of these means
a. large enterprise financing
b. t-bills and federal investment bonds / debenture
c. inter- bank lending / borrowing
d. b & c
Answer: d
35. Expression Finance Certificates & Certificate of Investment in Musharika is
a. liability side financing
b. liability
c. assets
d. assets side financing
Answer: d
36. Factually it means a credit sale is
a. baimuajjal
b. mudarabah
c. ijarah
d. murabaha
Answer: a
37. An investor and his customer contribute either in shared possession of an assets or equipment, or in a combined commercial venture is
a. diminishing musharika
b. musharika
c. ijarah
d. salam
Answer: a
38. The term Shirrkah – al- aqd in Islamic commercial law refers to a partnership or joint venture formed by…
a. Payment of a fixed price
b. Safe keeping
c. Contract
d. Ruling by the shariah scholars
Answer: c
39. The Islamic financial system prohibits transactions featuring
a. Extreme uncertainties resulting from speculation and gambling
b. Sharing of profit and risk of loss
c. Partnership agreements
d. Trading for profit
Answer: a
40. Are Islamic banking products for Muslims only
a. For Muslims and and those non-Muslims who are allowed by Sharri’ah scholars.
b. No
c. Yes
d. For muslims and those who convert to muslims
Answer: b
41. Wakalah is used by Islamic banks mostly for
a. Consumer loans
b. Sales through documents
c. Fund management
d. Guaranteeing payments
Answer: c
42. The term Arbun refers to
a. Down payment
b. Loan payment
c. Savings.
d. Deposit with a bank.
Answer: a
43. Banking may broadly be described as the business of providing
a. Investment services
b. Financial services
c. Loans and mortgages
d. Foreign exchange services
Answer: b
44. Which of the following is a type of investing instrument?
a. Musharakah
b. Tawarruq
c. Kafalah
d. Qimar
Answer: a
45.The term Aqd in Islamic commercial law refers to
a. Ownership of goods
b. A contract
c. Non-permissible
d. Permissible
Answer: b
46. Takaful, a form of Islamic insurance, refer to a scheme for
a. Struggling for livelihood
b. Perfect ownership
c. Equal distribution of wealth
d. Mutual assistance and shared responsibility
Answer: d
47. The Arabic term Ayn refers to
a. Time of possession
b. Fixation of cost
c. A tangible (physical asset)
d. Conditions
Answer: c
48. What does the abbreviation IFSB stands for
a. Islamic Finance Supervision and Banking
b. Islamic Financial Supervisory Board
c. Islamic Financial Services Board
d. Islamic Financial Services Bank
Answer: c
49. Shariah provides a network of ethical and moral rules of behaviour for
a. Potential buyers
b. Travelling merchants
c. All participants in market
d. Muslims only
Answer: c
50. Religious supervisory board of Islamic banks plays an important role in
a. Determination of the ratio of profit-sharing according to Islamic principles.
b. Raising capital for the banks according to Islamic principles.
c. Introduction of new product and services that comply with Islamic princples.
d. Mobilisation of funds according to Islamic principles
Answer: c
51. Tameen is another name for
a. Takaful (Islamic insurance)
b. Faqir (a poor person)
c. Shirkah (partnership)
d. Tatfif (fraud)
Answer: a
52. Amanah in Islamic banking refers to
a. A deposit held in trust which creates various fiduciary duties.
b. An expert who is consulted for advice on Islamic law.
c. An interest-free loan.
d. A loan that does not have to be repaid
Answer: a
3. The Arabic term Haq means
a. Legal rights
b. Credit proposal
c. Taking full responsibility
d. Kind of sale
Answer: a
54. The Shari’ah is set of rules or law governing
a. Spending on objects which have been explicitly prohibited.
b. The quantity and quality of a good for sale
c. Economic, social, political and cultural aspects of Islam societies.
d. Principles of partnership
Answer: c
55. The Arabic term Qimah implies
a. Duties of a man to god
b. A particular situation
c. Sharing certain risk
d. Sale of the real value of goods
Answer: d
56. The term Hiba refers to a contract of
a. Money payment
b. Gift
c. Investment
d. deposit
Answer: b
57. Under a Salam contract goods are
a. Not delivered until payment is made
b. Taxed before delivery
c. Purchased for delivery in future
d. Delivered for payment later
Answer: c
58. The term Kafalah in islamic commercial law refers to
a. Finance
b. Guarantee
c. Purchase
d. Bargain
Answer: b
59. Islamic financial system seeks to
a. Encourage wasteful expenditure
b. Administer land revenue
c. Postpone debt repayment
d. Enhance equality and fairness in financial dealings for the good of society as whole
Answer: d
60.Maqsid, an Islamic term, refers to
a. Land and possessions
b. Objectives of Shari’ah.
c. Terms of a valid sale contract
d. A contract of sale which is binding
Answer: b
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