CONFIDENTIAL BA/DEC 2019/F1N546

UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION

COURSE ISLAMIC FINANCE

COURSE CODE FIN546

EXAMINATION DECEMBER 2019

TIME 3 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of five (5) questions.

2. Answer ALL questions in the Answer Booklet. Start each answer on a new page.

Do not bring any material into the examination room unless permission is given by the
invigilator.

Please check to make sure that this examination pack consists of:

i) the Question Paper

ii) an Answer Booklet - provided by the Faculty

Answer ALL questions in English.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 4 printed pages

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CONFIDENTIAL BA/DEC 2019/FIN546

QUESTION 1

a) Shari'ah contracts are divided into several categories with regard to the purpose of the
contracts. Each of the category differs from one to another mainly from the perspective
of legal purpose.

Explain four (4) of the Shari'ah contracts.

(10 marks)

b) Explain the following supporting contracts:

Muqassah
Ibra'
We'd
v. Hibah
(10 marks)

QUESTION 2

a) Wan Bhd is a parent company to a few subsidiaries that are involved in both
permissible and non-permissible activities. Based on the following Wan Bhd's financial
report, calculate the following ratios and determine the Shari'ah status of the company.
5% benchmark
20% benchmark
Cash over total asset
v. Debt over total asset

RM RM
Balance sheet items (million) (million)
Total cash Group Profit Before Tax (PBT) 1,000
i. RHB Islamic 50 Gambling activities 10
ii. CIMBBank 30 Insurance business 15
iii. Affin Bank 20 Liquor business 5
Sales of cigarette 6
Total Debt Stock Broking business 80
i. Islamic Medium Term Notes 10 Pork supply business 2
ii. Short Term Bills 8 Fish farming business 11
iii. Wan 10 years bond 20 Palm oil Plantation 90
iv. OCBC Mortgage Loan 6 Resort & Hotel Operations 70
Interest received from conventional
bank 20
Coupon payment received from
Total Assets 200 bond 20
Dividend received from Islamic
bank 15
Rental fees from disco, night club
business 40
Rental fees from tobacco & liquor
business 40

(10 marks)

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b) All Islamic banks offer saving accounts to their customers with different underlying
contracts.

i. Discuss two (2) types of contract used by Islamic banks for saving accounts.
(6 marks)

ii. Miss Naurah opened an Islamic saving account with Al-Bakar Bank on 1st October
2019. The total balance maintained by her on daily basis is RM125,000. Calculate
the hibah amount to be credited to Miss Naurah's account at the end of March.
Assume the hibah rate is 4 percent.
(4 marks)

QUESTION 3

a) In Islamic terminology, gambling is often referred to by two words; qimar and maysir.
Explain the key characteristics of gambling, based on the various definitions provided
by jurists.
(8 marks)

b) Money market serves as a suitable avenue for banks to implement proper liquidity
management practices.

Discuss two (2) advantages of an efficient Islamic money market to the Islamic banks.

(7 marks)

c) The Islamic financial system operates and functions in a similar manner to the
conventional financial system. Consequently, the Islamic finance industry faces
relatively similar challenges to those faced by the conventional system. Briefly explain
the strategies for growth and competition in Islamic banking and finance.
(5 marks)

QUESTION 4

a) Generally, offer and acceptance are exercised in spoken words as the will of the
contracting parties can be expressly signified in their own words.

Discuss the conditions for a valid offer and acceptance as being prescribed by the
jurists.
(8 marks)

b) Explain General Takafulcontract in a "Wakalah and Mudharabah Hybrid Model".

(4 marks)

c) Elaborate two (2) common models and structures in Islamic home financing offered by
Islamic banks worldwide.
(8 marks)

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CONFIDENTIAL 4 BA/DEC 2019/FIN546

QUESTION 5

a) Islamic Accepted Bill (IAB) is a result of the securitization of either receivables or

payables due to or from the customer of Islamic bank. Explain two (2) types of
financing under the IAB facility.
(10 marks)

b) Describe the sources of Islamic law (Shari'ah) that act as the main reference in doing
muamalat in Malaysia.
(10 marks)

END OF QUESTION PAPER

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