Islamic Finance Applications: Musyarakah Contract and Sukuk Disputes

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What is the primary reason a bank may require a security pledge from its partner in a Musyarakah contract?

To demonstrate Islamic financial principles

To protect the bank from the risk of partner's negligence (correct)

To promote social responsibility in the community

To ensure a guaranteed return on investment

When disputes arise in sukuk prospectuses, what alternative to the judiciary is often preferred due to inadequate shariah knowledge among judges?

Mediation by a religious leader

Ruling by a Shariah Supervisory Board

Expert opinion in fiqh Muamalat (correct)

Arbitration by a local Islamic scholar

What is the primary principle underlying the Musyarakah contract in Islamic finance?

Prohibition of riba

Guaranteed returns on investment

Promoting social welfare

Mutual consent and shared risk (correct)

What is a key difference between Islamic finance and conventional finance?

The prohibition of riba in Islamic finance (B) Signup and view all the answers

What is the role of the Shariah Supervisory Board in Islamic finance?

To ensure Shariah compliance of Islamic finance products (B) Signup and view all the answers

What is the general principle regarding sales in Islamic law?

Sales are lawful unless more specific evidence excludes it. (A) Signup and view all the answers

What is the condition for trade to be valid according to the Quran?

Mutual consent and the absence of riba. (D) Signup and view all the answers

What is the ruling on a transaction that involves a lock-in period in Islamic finance?

It is permissible as long as it is a financing product. (C) Signup and view all the answers

What is the consequence of combining contracts in Islamic law?

The combination is valid as long as each contract is permissible on its own. (A) Signup and view all the answers

What is the basis for determining what is halal and haram in Islamic law?

The Quran and the Hadith. (D) Signup and view all the answers

What is the implication of Imam al-Shafi`i's validation of a contract?

The contract is valid if it involves deferment and spot payment. (C) Signup and view all the answers

Which of the following maxims is related to the concept of permissibility being the original rule for all things?

Permissibility is the original rule for all things (D) Signup and view all the answers

According to the Hanbali School, which maxim is an important guiding principle in Islamic finance?

Certainty is not overcome by doubt (C) Signup and view all the answers

What is the fundamental requirement in every contract in Islamic finance?

Justice (B) Signup and view all the answers

Which maxim emphasizes the importance of intention and meaning in Islamic contracts?

In contracts, greater weight is given to intention and meaning than words and forms (A) Signup and view all the answers

According to the Maliki view, which maxim is closest to the concept of certainty not being overcome by doubt?

Certainty is not overcome by doubt (A) Signup and view all the answers

What is the basis of judgement in Islamic finance, according to one of the maxims?

Knowledge and understanding (D) Signup and view all the answers