Which one is it the most accurate answer?

1. Which of the following is a characteristic of the Salam contract?

a. The buyer pays the seller part of the price of the asset in advance

b. The buyer pays the seller the full price of the asset in advance

c. The asset is delivered at the time the contract is signed

d. The goods must exist at the time of signing the contract

2. Which of the following is not a characteristic of the Salam contract?

a. The goods must be homogenous or identical

b. Quality and quantity must be determined at the time of contract signing

c. Salam cannot be tied to the produce from a specific farm, field or tree

d. Date and place of delivery is determined later, not at the time of the contract signing

3. Which statement below is true about the Salam contract?

a. The seller will provide a specific commodity to the buyer, with delivery and

payment both in the future

b. The seller will provide a specific commodity to the buyer, with delivery in the

future and payment in advance today

c. The seller will provide a specific commodity to the buyer, with delivery now and

payment in the future

d. The seller will provide a specific commodity to the buyer, with delivery and

payment both today

4. The Salam contract resembles which conventional finance product?

a. Loan contract

b. Forward contract

c. Options contract

d. Swap contract

5. Under the Salam contract the seller is at risk:

a. For the entire period of the contract

b. For a very short period at the beginning of the contract

c. For a very short period towards the end of the contract

d. At no point during the contract

6. The two Islamic banking products that are exceptions to the Shariah rules of

goods being in existence and possession of the seller are:

a. Salam and Murabaha

b. Mudaraba and Musharaka

c. Ijara and Murabaha

d. Salam and Istisna

7. In a Salam contract the Muslam is:

a. The buyer

b. The seller

c. The goods under contract

d. The payments made during the contract

8. In a Salam contract the Muslam Ileihi is:

a. The buyer

b. The seller

c. The goods under contract

d. The payments made during the contract

9. In a Salam contract the Ras al Maal is:

a. The buyer

b. The seller

c. The goods under contract

d. The payments made during the contract

10. In a Salam contract the Muslam Fihi is:

a. The buyer

b. The seller

c. The goods under contract

d. The payments made during the contract

11. In which Islamic banking contract is the purchase and sale of a commodity done

for deferred delivery in exchange for immediate payment?

a. Istisna

b. Salam
c. Ijara

d. Musawama

1. D - The goods must exist at the time of signing the contract.

2. D - Date and place of delivery is determined later, not at the time of the contract signing.
3. B - The seller will provide a specific commodity to the buyer, with delivery in the future
and payment in advance today.
4. B - Forward contract.
5. B - For a very short period at the beginning of the contract.
6. D - Salam and Istisna.
7. A - The buyer.
8. B - The seller.
9. B - The seller.
10. C - The goods under contract.
11. B - Salam.

Write T for true and F for false next to the statement with Justification.

1. Salam is a sales contract where the seller supplies specific goods to the buyer in the

future against full advance payment on spot.

2. The deferred delivery for immediate payment in Salam is an exception allowed

by Shariah.

3. In Salam the seller is exposed to a total loss of capital.

4. In a Salam contract delivery of the goods on the due date is a must.

5. Using a Salam contract, an exporter can be paid in advance and can use these funds

to buy the raw material to manufacture the items of the export contract.

6. In a Salam contract, the seller can decide to sell their goods to a different buyer if

the sales price increases in the future.

7. A Salam contract can be cancelled unilaterally with due notice.

8. The buyer of a Salam contract pays, on spot, the full price in advance for future

delivery of the goods, expecting the price to be less in the future.

9. Salam can only be used for goods that are very standardized.

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T - This is a correct description of a Salam contract.

F - Deferred delivery for immediate payment is not an exception in Salam but the norm.

F - In Salam, the seller is not exposed to a total loss of capital. They receive payment in advance,
which reduces their risk.

T - Delivery of the goods on the due date is mandatory in Salam.

T - This is a possible use of a Salam contract.

F - The seller cannot decide to sell their goods to a different buyer in a Salam contract, as the
contract specifies a specific buyer and price.

F - A Salam contract cannot be cancelled unilaterally. Both parties must agree to any changes.

F - The buyer of a Salam contract pays, on spot, part of the price in advance for future delivery of the
goods, expecting the price to be more in the future.

T - Salam is typically used for goods that are very standardized and have a known market price.