PRACTICE QUESTIONS

CERTIFIED

ISLAMIC BANKER

JANUARY
2016

www.iqnglobal.com

Certified Islamic Banker

Practice Questions
1)

Which of the following is the guiding principles of Islamic Finance?

(a)

To provide banking and financial services which are compliant with State Law

(b)

To provide banking and financial services which best compliance of ethical principles

(c)

To provide banking and financial services which are compliant with Shariah

(d)

To provide banking and financial services which are not compliant with Islamic Law
and Principles

2)

Which of the following is correct about contract in Islamic Law?

(a)

The denition of contract (al-aqd) in Shariah law is similar to that in English common
law, but is wider.

(b)

The denition of contract (al-aqd) in Shariah law is very different from English
common law.

3)

(c)

Contract is Islamic Law does not require any acceptance.

(d)

Contract is Islamic law must be in writing.

Which of the following conditions of contract is not correct according to Islamic Law and
Principles?
(a)

It is a valid condition if it is not against the contract.

(b)

A condition is not void, which seems to be against the contract, but it is in the market
practice, if its voidness is not proven with the clear injunctions of the Holy Quran and
Sunnah.

(c)

A condition that is against the contract and not in the practice of market but it is in
favour of one of the contractors or subject matter, this type of condition is valid.

(d)

A condition is not a void condition, which is against the contract, not in the market
practices and not in favour of any contractor.

4)

Which of the following is the correct definition of Bai Murabahah?

(a)

It refers to normal sale in which cost price is not known.

(b)

It refers to a sale in which cost and sale price is known to the buyer.

(c)

It is a kind of sale in which payment is spot while the delivery of the good is deferred.

(d)

It refers to such sale in which payment is delivery is spot while payment is deferred but
cost is not known.

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Certified Islamic Banker

Practice Questions
5)

6)

7)

Which of the following sequence as source of Islamic Law is correct?

(a)

Quran, Sunnah, Ijma and Ijtihad

(b)

Sunnah, Quran, Ijma and Ijtihad

(c)

Ijtihad, Quran, Sunnah and Ijma

(d)

Quran, Sunnah, Ijtihad and Ijma

How many big elements are there in a valid sale?

(a)

Six

(b)

Eight

(c)

Four

(d)

Two

Which of the following is most correct regarding Buyer & seller (Mutaaquadeen) of sale
contract?

8)

9)

(a)

Buyer of the contract must be mentally sound at the time of contract.

(b)

Seller of the contract must be sane at the time of contract.

(c)

Minor cannot be in the sale contract at any circumstances.

(d)

Both buyer and seller of the contract must be mentally sound at the time of contract.

What is the correct meaning of Mabee?

(a) Contract
(b)

Price

(c)

Possession or delivery

(d)

Subject matter

A valid sale must be __________________.

(a)

Immediate

(b)

Attributed to a future date

(c)

Contingent on future event

(d)

Held after sometime

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Certified Islamic Banker

Practice Questions
10)

Which of the following is not correct regarding subject matter of sale contract?
(a)

Subject matter of sale must exist at the time of sale.

(b)

Subject of sale must be a property of value.

(c)

The subject of sale should not be a thing which is not used except for a haram
purpose.

(d)

11)

12)

13)

14)

Subject matter could be anything, which is not capable of ownership/title.

Which of the following is permissible for investment or financing?

(a)

Services based on Riba

(b)

Manufacture or sale of non-halal products

(c)

Share trading to tobacco products

(d)

Entertainment activities that does not conflict with Shariah

Which of the following is impermissible for investment or financing?

(a)

Manufacture or sale of halal products

(b)

Gambling and gaming

(c)

Financial Services based on Shariah principles

(d)

Takaful Insurance

What is the role of Islamic Banks in profit loss sharing activities?

(a)

Debtor

(b)

Creditor

(c)

Working partner or manager of funds (mudarib or amil)

(d)

There is no role of Islamic Banks

Which of the following was the first revelation of Quran regarding Riba (interest)?
(a)

Surah Al 'Imran, verses 130: O you who have believed, do not consume usury, doubled
and multiplied, but fear Allah that you may be successful.

(b)

Surah Al-Rum, verse 39: And whatever you give for interest to increase within the
wealth of people will not increase with Allah. But what you give in Zakah, desiring the
countenance of Allah - those are the multipliers.

(c)

Surah Al-Baqarah, verse 275: Those who consume interest cannot stand [on the Day of
Resurrection] except as one stands who is being beaten by Satan into insanity.

(d)

Surah Al 'Imran, verses 130: O you who have believed, do not consume usury, doubled
and multiplied, but fear Allah that you may be successful.

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Certified Islamic Banker

Practice Questions
15)

From 'Abdallah ibn Hanzalah: The Prophet, (blessings and peace of Allah be upon him), said:
"A dirham of Riba which a man receives knowingly is worse than committing adultery ______
times"

16)

(a)

Forty-six

(b)

Seventy-two

(c)

Thirty-six

(d)

Thirty-nine

From Abu Hurayrah: The Prophet, (blessings and peace of Allah be upon him), said: "There
will certainly come a time for mankind when everyone will take ______ and if he does not do
so, its dust will reach him."

17)

(a)

Riba

(b)

Profit

(c)

Capital

(d)

Bribe

Which one of the following statements is correct?

(a) The unanimous current view is that all interest is not Riba and however is banned.
(b)

The unanimous current view is that all interest is Riba and is therefore is banned.

(c)

There is no unanimous view regarding all interest as Riba.

(d)

The prohibition on charging interest also preclude using interest rates as a reference
point for calculating profit returns.

18)

There is Islamic objection to a bank using interest rates as a reference point to calculate the
required profit return as long as ___________.
(a)

The amount is not certain

(b)

The return is fixed

(c)

The project is trade related

(d)

The bank has a genuine stake in the outcome

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Certified Islamic Banker

Practice Questions
19)

Apart from the prohibition regarding receiving and giving interest, there are two other
activities prohibited by Shariah law that have had a signicant impact on Islamic nance.

They are ____________.

20)

(a)

A ban on profit sharing and the prohibition of uncertainty or risk-taking.

(b)

A ban on gambling and the prohibition of uncertainty or risk-taking.

(c)

A ban on sale contract and the prohibition of uncertainty or risk-taking.

(d)

A ban on gambling and the prohibition of selling pork.

Minor uncertainties may be permitted in situations, provided certain necessary conditions

are fullled. Which of the following is not a condition for permission in case of minor
uncertainties?
(a)

The purchaser is not given the opportunity of inspecting goods before purchasing
item.

(b)

The goods or service of the transaction be in existence.

(c)

The characteristics of the goods or service are known.

(d)

If the transaction or exchange is to take place in future, then the date when it is to take
place should be certain.

21)

Islamic principles of business and finance emphasises _______________ of the community over
individual rights.

22)

(a)

The welfare

(b)

The earnings

(c)

The richness

(d)

The socialism

Which one of the following is the correct principle of sales?

(a)

Buyer can return the goods any time

(b)

Seller is not liable to tell the defects of goods

(c)

Seller should describe the defects and qualities of the goods

(d)

Seller can lie sometime to get the benefit in transaction

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Certified Islamic Banker

Practice Questions
23)

24)

25)

26)

27)

Which one of the following is not a characteristic of As-Salam contract?

(a)

Delivering certain goods

(b)

Delivering goods with unknown quality

(c)

Profit is paid on spot

(d)

Delivering goods in a certain future date

Which one of the following is correct regarding Riba?

(a)

Quran defined Riba very clearly

(b)

Riba was well known practice to previous societies

(c)

Only Arabs had the exact sense of Riba

(d)

Riba was prohibited only for Muslims

Which one of the following could be Riba transaction?

(a)

Gold for gold

(b)

Silver for silver

(c)

Wheat for wheat

(d)

Barley for dates

What is the correct meaning of Nasiyah in Arabic language?

(a)

Time span

(b)

Premium of the loan

(c)

Principal of the loan

(d)

Benefit of the loan

Riba-al-fadl occurs in exchange contract only and applies to six items which has been clearly
mentioned in Hadith. Which of the following six items have been mentioned in the hadith
where Riba-al-fadl could be applied?
(a)

Gold, silver, rice, raisin, wheat and barley

(b)

Gold, silver, date, raisin, wheat and barley

(c)

Gold, platinum, rice, raisin, wheat and barley

(d)

Platinum, salt, rice, raisin, wheat and barley

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Certified Islamic Banker

Practice Questions
28)

29)

30)

31)

How Riba-al-fadl could be avoided in a transaction?

(a)

Sell gold in exchange of un-equivalent gold

(b)

Sell silver in exchange of equivalent gold

(c)

Sell gold in exchange of equivalent platinum

(d)

Sell gold in exchange of equivalent gold

What is the correct meaning of Riba al-duyun?

(a)

Usury in trade

(b)

Usury in debts

(c)

Usury in exchange

(d)

Usury mentioned in hadith

The origin of Islamic banking can be traced back to _______________________.

(a)

The advent of Islam

(b)

The 20th century

(c)

The 21st century

(d)

The late 1950s

"The principles of Islamic finance may represent a possible cure for ailing markets." Who
made this comment?

32)

(a)

The Vatican

(b)

The Prophet Muhammad (SAW)

(c)

The Imam of Grand Mosque

(d)

Barak Obama

Money is a ___________________ for the people of Islam, Eemaan and good intention.
(a)

Blessing

(b)

Loss and calamity

(c)

Curse

(d)

Cure

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Certified Islamic Banker

Practice Questions
33)

Money has the importance for the life of people which has been confirmed by Quran. In
order to underline the importance of money in the life of individuals and communities, it is
mentioned in the Qur'aan commendably or condemningly in _____________ places.

34)

35)

(a)

More than hundred places

(b)

Around eighty places

(c)

More than eighty

(d)

No less than eighty places

The law of Islaam encourages construction of the earth and developing it _________________.
(a)

Lavishly

(b)

Economically

(c)

Cautiously

(d)

Prudently

Omar-b-al-Khattab reported : I heard the Messenger of Allah (may peace be upon him) say :
If you all had relied on Allah with due reliance, He would have certainly given you provision
as He supplies provisions to birds who get up hungry in the morning and return with full
belly at dusk.

This Hadith inspires people to _________________.

36)

(a)

Sit idle

(b)

Wait for sustenance

(c)

Do his best in order to earn his livelihood with reliance to Allah

(d)

Do his best in order to earn his livelihood with any means

The revealed book of Islam encourages its followers to ________________________.

(a)

Disperse in the land even on Friday

(b)

Take leave on Friday and get rest

(c)

To discourage works on Friday

(d)

Perform the Friday prayer and not to work on the day

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Certified Islamic Banker

Practice Questions
37)

38)

In Islamic economy what is the status of a man?

(a)

A trustee and a beneficiary

(b)

Real owner of everything

(c)

Man cannot use anything

(d)

Man has been created for the service of everything

1. Abu Hurairah reported that the messenger of Allah said: Verily Allah is pure. He does not
accept which is not__________.

39)

40)

41)

(a)

Impure

(b)

Pure

(c)

Tainted

(d)

Dirty

Which of the following income is not forbidden in Islam?

(a)

Price of dog

(b)

Earnings of prostitute

(c)

Foretelling of a soothsayer

(d)

Price of sheep

Which one of the following is an objective of Sadaqah?

(a)

Enhancing the power of the poor

(b)

Enhancing the purchasing power of the poor

(c)

Decreasing the power of the rich

(d)

Decreasing the purchasing power of the rich

Which of the following spending has not been mentioned in the verse of Quran?
(a)

Spend of good is for parents

(b)

Spend of good is for relatives

(c)

Spend of good is for orphans

(d)

Spend of good who sit idle

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Certified Islamic Banker

Practice Questions
42)

43)

44)

Who have been given the notice of war from Allah and His messenger?
(a)

Fornicators

(b)

Usurers

(c)

Non-Muslims

(d)

Who dont perform Salah regularly

Hoarding of wealth has been ________________ by Islam in very clear terms.

(a)

Condemned

(b)

Encouraged

(c)

Started

(d)

Cheered

Which of the following policy have been established as best in Islam with reference to Quran
and Sunnah?

45)

(a)

Policy of extremism

(b)

Policy of moderation

(c)

Policy of transgress

(d)

Policy of insolvency

According to the Hadith of Prophet Muhammad (PBUH), which of the following three form a
part out of twenty-four parts of Prophethood?

46)

(a)

Good manners, delay and moderation

(b)

Good manners, insolvency and moderation

(c)

Good manners, delay and extremism

(d)

Love of people, delay and moderation

Which of the following is a characteristic of Interest based economy?

(a)

It induces people and get fair returns

(b)

Borrowers will be encouraged to lend loan to be used for production

(c)

Rich will be pleased to accumulate more wealth

(d)

General well beings and welfare is maximised

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Certified Islamic Banker

Practice Questions
47)

48)

49)

50)

Which of the following is a characteristic of Interest Free Economy?

(a)

Gap between poor and rich become wide and wider

(b)

People will accumulates wealth even by all using illegal means

(c)

Rich will be pleased to accumulate more wealth due to large deposits earning

(d)

Individuals will joins hands and extends cooperation

Which of the following is correct for an Islamic Economy?

(a)

Capital and land are collective national property

(b)

Government is the ruler of all property

(c)

Government is the caretaker to serve men

(d)

Government is the caretaker to rule men

Which of the following are considered as the factors of production in a capitalist economy?
(a)

Capital, land and labour

(b)

Capital, land, labour and entrepreneur

(c)

Capital and labour

(d)

Government, capital and land

Which of the following is not the correct distribution of wealth produced by the combined
action of capital, land and labour?

51)

(a)

One share of it would go to Capital in the form of profit.

(b)

One share would go to Land in the form of rent.

(c)

One share of it would go to Capital in the form of interest.

(d)

One share would be given to Labour in the form of wages.

Which of the following is not correct regarding conventional commercial banking?

(a)

Modern banking operations involve "debt-related Riba" prohibited by the holy Quran.

(b)

Modern banking operations involve "sales-related Riba" prohibited by the well-known

ahadith.

(c)

Riba exists in every debt transaction of commercial banks.

(d)

The discount is not the interest charged by the bank for the time beginning from the
date of discounting till maturity.

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Certified Islamic Banker

Practice Questions
52)

53)

Which of the following type of deposit accounts is acceptable Islamically with condition?
(a)

Savings account

(b)

Fixed deposit

(c)

Current account which pays interest

(d)

Current account which does not pay interest

To avoid exchange related Riba which of the following type of transactions are encouraged
by the majority of Islamic scholars?

54)

(a)

Spot rate transactions

(b)

Future transactions

(c)

Forward rate transactions

(d)

Both spot and forward rate transactions

Which of the following is not a fee based transaction or service of a commercial banking?
(a)

Opening of bank accounts

(b)

Safe-keeping of negotiable instruments including shares and bonds and collection of

payments

55)

(c)

Internal (domestic) and external transfer operations

(d)

Lease agreements

How fees of services given by an Islamic Bank could lead to Riba?

(a)

If it is an absolute amount taking into account the benefit passed and costs incurred.

(b)

If it is a percentage of the value of loan.

(c)

If it is based on the benefit to the customer on one hand, and the efforts exerted by
the bank if the service does not involve loan.

(d)

56)

If the fee is named as interest.

Which of the following is a correct feature of Musharakah?

(a)

One party provides the capital while the other party manages the business

(b)

Profit is shared in pre-agreed ratios and

(c)

Loss is borne by the provider of capital

(d)

Partners pool their capital to undertake business

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Certified Islamic Banker

Practice Questions
57)

58)

59)

60)

61)

Which of the following is a correct feature of Mudarabah?

(a)

Partners pool their capital to undertake business

(b)

One party provides the capital while the other party manages the business

(c)

All providers of capital are entitled to participate in management

(d)

Loss is borne by each partner strictly in proportion

Which one of the following is correct for a Mudarabah contract by an Islamic bank?
(a)

Primarily bank functions as the Mudarib

(b)

Primarily bank functions as the Rabb-al maal

(c)

The simple Mudarabah contract has three tier

(d)

First tier of contract involves bank and the parties to whom finance is provided

According to the Shariah definition what is the correct status of bank deposit?
(a)

It is qard

(b)

It is amanah

(c)

It is not qard

(d)

It is both amanah and qard

Which of the following is not a correct mechanism of Savings deposit?

(a)

Account based on the wadiah mechanism

(b)

Account based on the mechanism of mudarabah

(c)

Account based on the mechanism of Saalam

(d)

Account based on the mechanism of qard hasan

Which of the following is not a correct feature of a Mudarabah Savings deposit?

(a)

To request permission from depositors to make use of their funds so long as the funds
remain with the bank

(b)

To reward customers a fixed percentage of return based on the amount of deposit

(c)

To claim ownership over all profits derived from the use of funds

(d)

To reward the customers by returning a portion of the profits, if any, from time to time

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Certified Islamic Banker

Practice Questions
62)

63)

64)

65)

66)

Which of the following is not a correct activity of Mudarabah deposit account?

(a)

Depositor and Bank discuss terms of account

(b)

Bank invests funds in assets and projects and manages its operations

(c)

Profits if negative, are absorbed by Bank

(d)

Business generates positive or negative profits

Which of the following is a feature of Al Mudarabah Al Muqayyadah?

(a)

Rab-ul-Maal may specify a particular business

(b)

Rab-ul-maal gives full freedom to Mudarib

(c)

Mudarib is authorised to do anything

(d)

There is no restriction on the business

Which of the following is not a feature of Al Mudarabah Al Mutlaqah?

(a)

Rab-ul-Maal may specify a particular business

(b)

Rab-ul-maal gives full freedom to Mudarib

(c)

Mudarib is authorised to do anything

(d)

There is no restriction on the business

Which of the following is not an activity of Mudarabah financing structure?

(a)

Bank and Client discuss business plan

(b)

Client sets up the business and manages its operations

(c)

Bank sets up the business and manages its operations

(d)

Profits if positive, are shared between Client and Bank as per a pre-agreed ratio

Which of the following is not an activity of Musharakah financing structure?

(a)

Client and Bank discuss business plan and jointly contribute to capital of the venture

(b)

Client sets up the business and manages its operations

(c)

Client and Bank jointly set up the business venture and manage its operations

(d)

Profits if negative, are shared in proportion to capital contributions

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Certified Islamic Banker

Practice Questions
67)

68)

69)

Which one of the following is the correct meaning of Shirkat-ul-milk?

(a)

Joint ownership of two or more persons in a particular property

(b)

Partnership effected by a mutual contract

(c)

Where all the partners invest some capital into a commercial enterprise

(d)

Where all the partners jointly undertake to render some services for their customers

Which one of the following is the correct form of Shirkat-ul-Amwal?

(a)

Joint ownership of two or more persons in a particular property

(b)

Partnership effected by a mutual contract

(c)

Where all the partners invest some capital into a commercial enterprise

(d)

Where all the partners jointly undertake to render some services for their customers

Which one of the following is correct regarding Shirkat-ul-wujooh?

(a)

Joint ownership of two or more persons in a particular property

(b)

Partnership where partners purchase commodities on deferred price, by getting capital

on loan because of their goodwill and sell them at spot

70)

71)

(c)

Where all the partners invest some capital into a commercial enterprise

(d)

Where all the partners jointly undertake to render some services for their customers

Which of the following is not a valid condition for Shirkat-ul-Aqd?

(a)

The existence of Mutaaqideen (Partners)

(b)

Capability of Partners

(c)

The presence of the commodity

(d)

The presence of market place for the commodity

Which of the following is not a basic rule of capital in Musharakah agreement?

(a)

Quantified (Maloom)

(b)

Specified (Mutaaiyan) in currency

(c)

Must be in liquid form

(d)

Not necessarily be in liquid form

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Certified Islamic Banker

Practice Questions
72)

73)

74)

Which of the following is the basic rules of distribution of loss in a Musharakah contract?
(a)

Loss is distributed exactly according to the ratio of investment

(b)

Loss is distributed exactly according to the agreement of the partners

(c)

The ratio of loss for each partner must be determined in proportion to the actual loss

(d)

Fix a lump sum amount for anyone of the partners

Which of the following statement is correct regarding Mudarabah?

(a)

All partners participate in the management of the business and can work for it

(b)

Rab-ul-maal suffers loss because the Mudarib does not invest anything

(c)

All partners share the loss to the extent of the ratio of their investment

(d)

The liability of the partners is normally unlimited

Which

of

the

following

is

an

example

of

asset

side

financing

by

using

liability

side

financing

by

using

Musharakah/Mudarabah contract?

75)

(a)

Federal Investment Bonds / Debenture

(b)

Bridge financing

(c)

Securitisation for large projects

(d)

Inter- Bank lending / borrowing

Which

of

the

following

is

an

example

of

Musharakah/Mudarabah contract?

76)

(a)

Large enterprise financing

(b)

Import financing

(c)

Bridge financing

(d)

Certificate of Investment based

Which of the following is not correct regarding declining musharakah?

(a)

Client and Bank discuss business plan and jointly contribute to capital of the venture

(b)

Only client sets up the business venture and manages its operations

(c)

Profits if positive, are shared between Client and Bank as per a pre-agreed ratio

(d)

Loss are shared between Client and Bank in proportion to their respective capital
contributions

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Certified Islamic Banker

Practice Questions
77)

78)

Which of the following is not correct regarding Bai Murabahah?

(a)

It involves purchase of a commodity by a bank on behalf of a client

(b)

Purchased commodity is sold to client of the bank

(c)

It involves purchase of a commodity by a bank for its own use

(d)

Purchased commodity is sold on cost-plus profit basis

Which of the following is not an activity of Bai bithaman ajil (BBA) or simply bai muajjal?
(a)

Client approaches Bank-Vendor and identifies commodity

(b)

Client pays marked-up price immediately to bank

(c)

Client pays marked-up price in full or in parts over future (known) time period(s)

(d)

Bank sells commodity, transfers ownership and possession to Client at marked-up

price

79)

Which of the following is not correct in Working capital financing under murabahah
principle?
(a)

The customer requests the bank to provide financing for his working capital
requirements

(b)

The bank purchases or appoints the customer as its agent to purchase the required
goods

(c)

The bank allows the customer to settle the sale price after making the specific product

(d)

The bank subsequently sells the goods to the customer at an agreed price on a markup basis

80)

81)

Which of the following may not be suitable option for financing using BBA- murabahah?
(a)

Purchase of fixed assets

(b)

Purchase of personal assets

(c)

Purchase of personal assets and consumer durables

(d)

Construction of bridge

Which of the following is correct for both ijara and BBA-murabahah?

(a)

In both case bank is not a natural owner of the asset

(b)

In both case bank is a natural owner of the asset

(c)

In both case bank client is a natural owner of the asset

(d)

Both financing have doubt in Shariah

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Certified Islamic Banker

Practice Questions
82)

Which of the following is not correct for a simple Ijara contract?

(a)

Bank leases out the asset to Client, allowing it to take possession and put into
specified use

83)

84)

(b)

Asset reverts back to Client

(c)

Asset reverts back to Bank

(d)

Client pays known rentals over future (known) time period(s)

Which of the following is not correct for lease-sale or al-ijara-thummalbai (AITAB)?

(a)

Bank appoints Client as its Agent

(b)

Asset reverts back to Client

(c)

Asset reverts back to Bank

(d)

Bank makes arrangement for payment of purchase price to Vendor

How conventional leasing and Islamic leasing is different?

(a)

They are both same

(b)

The lessor transfers substantially the risks and rewards incidental to the ownership of
the leased assets to the lessee

85)

86)

(c)

The leased asset remains in the risk of the lessor

(d)

The leased asset remains in the risk of the lessee

Which of the following transaction is most suitable for a simple Ijara?

(a)

Working capital financing

(b)

Purchase of personal assets

(c)

Transaction of aircraft

(d)

Transaction of houses and cars

What is a Salam contract?

(a)

This is a deferred delivery contract

(b)

This is a spot delivery contract

(c)

This is a contract of buy and sale

(d)

This is a partnership contract

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Certified Islamic Banker

Practice Questions
87)

Which of the following is not correct regarding Istisna contract?

(a)

A seller develop or manufacture a commodity with clear specifications for an agreed

price

88)

89)

90)

(b)

Nothing is exchanged on spot or at the time of contracting

(c)

Something need to be exchanged at the time of contracting

(d)

Buyer makes payment of price in parts over the agreed time period

Which of the following is not a correct activity in an Istisna contract?

(a)

Client asks Bank to develop or construct or manufacture an asset

(b)

Bank asks Manufacturer to develop or construct or manufacture asset

(c)

Manufacturer gives delivery of asset to Bank

(d)

Manufacturer gives delivery of asset to Client

Which of the following is not correct for Qard financing of W amount?

(a)

Client approaches Bank for loan of L and offers collateral X

(b)

Client repays W plus time value of W

(c)

Bank lends an amount W to Client

(d)

Client repays W plus expenses to Bank

In a Shariah approved letter of credit grant, the Bank requires the Client to place a deposit to
the full amount of the price of goods to be purchased/ imported, which it accepts under the
principle of ___________.

91)

(a)

Al-wadiah

(b)

Al-shariah

(c)

Al-arafah

(d)

Al-barakah

What is the Murabahah process to finance LC?

(a)

Banks themselves import the required goods and then sell these goods to the
importer

(b)

LC is being opened at zero margin

(c)

The bank will become Rabbul-Maal and the importer Mudarib

(d)

The bank will become Mudarib and the importer Rabbul-Maal

Page 20 of 24

Certified Islamic Banker

Practice Questions
92)

93)

94)

Which of the following is not correct for a letter of Guarantee given by an Islamic Bank?
(a)

The Letter of Guarantee may be provided in respect of the performance of a task

(b)

The Client may be required to place a certain amount of deposit for this facility

(c)

The Bank charges the Client a fee for the services it provides

(d)

The Bank pays profit for the deposit made to the bank

Which of the following is not correct for Kafala of Islamic Banks?

(a)

This is a voluntary service

(b)

This is a fee based service

(c)

This is a free service

(d)

The bank can claim back the actual expenses incurred in offering the service

Which of the following pre-market service or securities are permissible in Islamic market
liberally?

95)

(a)

Derivatives

(b)

Debt Securities

(c)

Common stock

(d)

Preference stock

Which of the following IPO method is Islamically permissible and quite desirable?
(a)

Tender method

(b)

Tender with najash

(c)

Investment banker works as wholesaler

(d)

Less-effort underwriting

Page 21 of 24

Certified Islamic Banker

Practice Questions
96)

One common risk factor associated with ijara financing for the lessor is the risk of finding an
alternative use of the asset, of locating a new client, where the lease period is shorter than
the economic life of the asset. There is also the risk of the asset becoming obsolete and the
uncertainty about realisation of salvage value in the absence of an active secondary market
for assets. The risk is higher in case of ijara of specialised plant and machinery in the context
of project finance. The lessee also faces the risk of identifying an alternative source and
supplier for its specialised requirements at the end of the lease period.

This risk can be managed by going for _____________or hire-purchase, under which the lessee
has an option to purchase the equipment at the end of the lease period.

97)

(a)

ijara wa-iktina

(b)

ijara wa-wafa

(c)

Musharakah

(d)

bai bil-wafa

An alternative contractual mechanism used for financing the construction phase is

_____________under which an Islamic bank purchases a facility or equipment(s) as required and
specified by the project company from the construction company or the manufacturer and
sells the same to the project company at a higher price on a deferred basis.

98)

(a)

Bai Muajjal

(b)

Bai Salam

(c)

Bai bithman ajil

(d)

Bai Ijara

After the construction phase is over the project company may either enter into a contract of
joala or an ijara with the operator or the utility company. When the contract is joala for an
absolute fee, the risk of revenue fluctuation is borne by ______________ and the operators or
the utility company receives a reward which is known and unaffected by the risk factors.
(a)

The operators

(b)

The project company

(c)

The utility company

(d)

The bank

Page 22 of 24

Certified Islamic Banker

Practice Questions
99)

"If the head of an Islamic state needs money to give salaries to his army, but he finds no
money in the Kharaj department of the Baitul-mal (wherefrom the salaries are generally
given) he can give salaries from the sadaqah (Zakah) department, but the amount so taken
from the sadaqah department shall be deemed to be a debt on _______________________".
(a)

The Baitul-mal department

(b)

The Kharaj department

(c)

The sadaqah department

(d)

The Zakah department

100) The so called risk management products would be admissible in the Islamic framework, only
if they are free from _____________________. Clearly, fulfilling certain social needs or providing
certain maslahah does not, by itself constitute a strong enough ground for permissive
legislation.
(a)

Riba, gharar

(b)

Gharar and qimar or maysir

(c)

Riba, gharar and qimar or maysir

(d)

Riba, gharar and maysir

Page 23 of 24

Certified Islamic Banker

Practice Questions

SOLUTION
Question

Answer

Question

Answer

Question

Answer

35

69

36

70

37

71

38

72

39

73

40

74

41

75

42

76

43

77

10

44

78

11

45

79

12

46

80

13

47

81

14

48

82

15

49

83

16

50

84

17

51

85

18

52

86

19

53

87

20

54

88

21

55

89

22

56

90

23

57

91

24

58

92

25

59

93

26

60

94

27

61

95

28

62

96

29

63

97

30

64

98

31

65

99

32

66

100

33

67

34

68

Page 24 of 24