Exercise, sample answer Test 1 - FIN546

1.Which is/are the function(s) of sunnah in relation to the Quran?

A) Explain and further elaborate the meanings of the Quran.

B) Support the rulings already stated in the Quran
C) Act as an independent sources of islamic law
D) all of the above
Answer : D

2. What people collectively recognised and practise regarding words and actions to either be
done or avoided?.

A) Ijma
B) Istishab
C) ‘Uruf
D) Qiyas
Answer :C

3. Which is a suitable contract for a person to buy a house?

A) Bai-Bithaman Ajil
B) Al Wadiah
C) Mudarabah
D) None of the above
Answer :A

4. Philosophy of Islamic finance are as below except:

A) Avoiding gambling and games of chance (maysir)

B) Avoiding producing & selling pure goods
C) Avoiding producing & selling goods that are of no use, therefore of no value
D) Avoid Riba
Answer :B

5. Below are the principles of Islamic economics except

A) Khalifah is the Real Owner

B) Distribution of Zakat
C) Prohibition of Riba
D) Positive attitude towards economic activities and development
Answer :A
6. Choose the primary sources for islamic finance

A) Ijma & Istishab

B) Istishab & Al Quran
C) Al-Quran & Sunnah
D) Al-Quran & Qiyas
Answer : C

7. Riba in islam are true except:

A) From the syariah point of view, it is haram (forbidden)

B) Comes from money-loan
C) Riba can be negative, it can be below zero
D) Is the premium paid by the borrower to the lender along with the principles amount as
a condition for the maturity loan
Anwser: C

8. Deceit, fraud, uncertainty, danger, peril or hazard that might lead to destruction or loss
Choose the suitable term related to the above definition.
A) Riba
B) Gharar
C) Maysir
D) None of the above
Answer :B

9. Below are the secondary sources for islamic finance except:

A) Ijma
B) Istishab
C) Sunnah
D) Qiyas
Answer :C

10. Islamic bank also provide automobile financing facilities similar to conventional hire
purchase. The following information is an example of a car financing provided by AFD
Islamic bank.The amount to be financed is RM146,000 for 8 years tenure with the bank's
profit rate of 3.60%. What is the amount of monthly payments due to the conventional hire
purchase?

A) RM188 048
B) RM 23 506
C) RM 1958.83
D) RM 27,072
Answer :C
11. A contract can be deemed shari’ah compliant if the rights and obligations of the
contracting parties are not appropriately established in the contract. (True/false)
Answer: False

12. Exchange contracts entered into by two transacting parties to acquire ownership of an
asset or commodity leading to the transfer of ownership of the exchanged countervalues.
(True/false)
Answer: True

13. In Mudharabah contract, losses incurred will be shared based on the ratio of funds
invested by each partner. (True/false)
Answer: False

14. In Musyarakah contract, losses suffered shall be borne only by the capital provider.
(True/false)
Answer: False

15. Charitable contracts (uqud- plural of aqd) are based on voluntary charitable
actions/donations (tabarruat - plural of tabarru) such as gifts (hibah/hibat), benevolent loans
(qardh hasan), simple loans (ariyah), endowment (waqf), alms (sadaqah), etc. The donor
(mutabarre') does not seek any compensation in return for the value of donation. (True/false)
Answer: True

16. One of the features of Mudharabah General Investment Account is that the profit sharing
ratio is predetermined by the bank and is not negotiable with the capital provider.
(True/false)
Answer: True

17. Qard is one of the categories under charitable contract, a loan is given for a fixed period
on a goodwill basis and the borrower is required to repay the amount borrowed with interest.
(True/false)
Answer: False

18. The essential elements of Rahn are Pledgor, Pledgee, Obligation or right to a claim
(debt), Pledge (property pledged) and Contract (Offer and Acceptance). (True/false)
Answer: True

19. Supporting contract is a contract whereby a person (principal) asks another party to act
on his behalf (as his agent) for a specific task). (True/false)
Answer: False

20. Tawarruq and ‘inah differ in terms of the return of the commodity sold. The requester of
‘inah will return the commodity back to the seller, whereas the mutawarriq in the individual
form of tawarruq will sell the commodity to a new buyer other than the first buyer with neither
the arrangement nor the knowledge of the first seller. (True/false)
Answer: True
Contracts entered into by two transacting
parties to acquire ownership of an asset or
commodity leading to the transfer of
ownership of the exchanged countervalu