80 Questions
What did the Prophet (pbuh) advise the Arab Bedouin in the hadith mentioned?
Tie the camel and trust in Allah
What concept does risk management have its root in?
Hadith
What is the significance of the hadith about trading the money of orphans?
Emphasizes preserving and growing wealth
What does the hadith about trading the money of orphans teach about financial transactions?
Encourages fair business practices
How does the hadith regarding tying the camel relate to Islamic principles of risk management?
Advocates a balanced approach to managing risks
What did Abbas ibn Abdul Muttallib stipulate to avoid risk in his mudarabah business?
All of the above
What did Rasulullah (p.b.u.h.) do when he heard about the conditions set by Abbas ibn Abdul Muttallib?
He allowed the conditions
What is one purpose of permitted conditions in mudarabah business according to the text?
To prevent exposure to undue risks
What do well-documented contracts help in enhancing according to the text?
Trust and understanding among parties
In the context of the text, what role does the hadith regarding Abbas ibn Abdul Muttallib play?
It serves as a foundation for restricted mudarabah and risk management
What does Al-Ghazali define maqasid al-Shari’ah as?
Protection of faith, self, intellect, lineage, and wealth
Why is conforming to Shariah principles important in risk management?
To achieve the objective of protecting life, wealth, and dignity
Why is efficient risk management crucial according to the Qura’nic verses mentioned?
To control and mitigate anticipated risks
What is the significance of well-documented contracts in Islamic risk management?
Ensuring clarity and accountability in financial agreements
Why is trust emphasized in financial transactions according to the text?
To foster mutual respect and cooperation
What did Johnson describe risk as in his article?
Element of uncertainty
In Islamic finance, what is a common phenomenon that individuals or companies face?
Rate of return risk
According to Jorion and Khoury, what is risk defined as?
Variability or volatility in unexpected outcomes
Which factor may companies with long-term investments experience during a crisis?
Liquidity risk
What kind of risk cannot be avoided, according to the text?
Systematic risk
What is a common practice for export-oriented companies to minimize the risk of fluctuating exchange rates?
Utilizing hedging instruments
Why is it important for Islamic capital markets to have explicit and transparent methods for minimizing risk?
To ensure better investor positioning
What is the key role of risk management strategies in Islamic financial sectors?
To soothe investors concerned about Shari’ah principles
What is one of the main objectives of Shari’ah, as mentioned in the text?
Protecting the wellbeing and alleviating the hardship of humankind
How does sound risk management benefit both markets and investors according to the text?
By bolstering the market competitiveness
Why does Islamic commercial law require witnesses in financial agreements?
To ensure that all parties agree to the terms of the contract
What is the core objective of attestation in Islamic commercial law according to the text?
To mitigate the risk of parties denying agreed terms
In Islamic commercial law, why is it permissible for a creditor to receive collateral during a journey when a debt is involved?
To mitigate credit risk in case the debtor fails to fulfill obligations
How does the aforementioned verse emphasize the importance of trust in financial transactions?
By highlighting the need for effective steps to prevent fraudulence and losses
What is the significance of risk management in financial transactions based on the text?
Mitigating disputes and differences of opinion over agreed conditions
What did Prophet Yusuf advise the king of Egypt to do in order to manage the risk of the upcoming drought?
Develop an economic strategy to actively plant crops and store proceeds during the prosperous years
What is required in a financial transaction according to the Quranic verse mentioned?
Attestation by contracting parties in a specified term debt
What is the significance of having a scribe write down financial transactions according to the Quranic verse?
Ensures justice and prevents disputes
In the context of risk management, why is it important to fear Allah while entering into financial agreements?
To uphold ethical standards and honesty in transactions
What role does a guardian play in a financial agreement according to the Quranic verse mentioned?
May dictate on behalf of someone with limited understanding
Why is it important to write down financial transactions according to the content provided?
To have a record that can be referred back to in case of disputes
How did implementing Prophet Yusuf's advice help Egypt survive the seven years of drought?
By actively planting crops and storing proceeds during the prosperous years
Why is it crucial for both parties to be involved in documenting financial transactions?
To ensure shared responsibility and transparency
What is the primary purpose of contracting parties attesting to a debt for a specified term according to the Quranic verse?
To uphold justice in financial agreements
In managing risks, how does having witnesses involved benefit financial agreements?
Provides additional verification and credibility to transactions
What is one of the reasons that shari'ah scholars may need to reconsider their fatawa on the sale of shares?
There is gharar involved in the sale of shares
From a legal and practical viewpoint, if shares are not asset-backed, what issue might arise in the transaction?
Riba
In terms of Islamic jurisprudence, which school seems to provide leeway for the sale of shares if certain conditions are met?
Maliki
What is one key point made about the nature of shares from an accounting perspective?
Shares are considered assets for shareholders
What concept discussed in the text suggests that 'urf, or customs, should be taken into account when considering the sale of shares?
'Urf
What is a condition set by shari’ah scholars for firms developing Islamic index?
Regular submission of audit reports and accounts of listed companies
Why do shari’ah scholars suggest reviewing the accounts of subsidiary companies?
To identify un-Islamic transactions that may align with ratios
What does the Insolvency Act 1986 state about shareholders' entitlement to residual assets?
Shareholders can claim residual assets only if articles of association allow it
What provision can act as a safety valve and a criterion for accepting companies on an Islamic index?
Entitlement to residual assets in the articles of association
Why do Shari’ah auditors need to know the nature of share transactions?
To verify compliance with Islamic principles in transactions
What is the main feature of Islamic finance mentioned in the text?
Asset-backed financial products
When were the earliest criteria for creating an Islamic Share Index formulated?
In 1999 for the Dow Jones Islamic Market Index
What is the purpose of Islamising the stock market indexes mentioned in the text?
To provide halal income options for Muslims
What is a significant characteristic of the FTSE Islamic Index?
Low-debt, non-financial social ethical components
Why have shari’ah scholars established specific criteria for selling shares on the stock exchange?
To allow asset-backed sales in compliance with Islamic principles
What is the main point being made regarding shares and their ownership rights?
Shares are solely personal rights and not asset-backed.
Why is it important to convert 'urf into a shari’ah condition when dealing with shares?
To decrease information asymmetry and reduce gharar in the deal.
How can shari’ah audits of international equity funds benefit buyers of shares?
By informing buyers that their ownership is limited to a bundle of rights.
How can establishing an Islamic Securities House help mitigate risks in the stock exchange market?
By monitoring and advising investment in a volatile market.
What is suggested as a way to improve the filtering criteria for purchasing shares?
Converting 'urf into shari’ah conditions for every share transaction.
What is the main reason for using filters in Islamic finance for shares?
To remove companies with high debt
Why is it important for Islamic finance to consider regulations, fiqh issues, and investment appraisal?
To ensure compliance and proper assessment
Why does the text mention that statistics should compare like-with-like in Islamic finance analysis?
To establish a sensible analysis
In Islamic finance, what is the significance of relying on liquidation aspects to substantiate the asset-backed position of shares?
Strengthens the asset-backed position of shares
What does the text suggest about the dichotomy between secular and Islamic legal systems in the context of Islamic finance?
Further debate on the dependence of Islamic finance over secular law
What does the legal maxim 'majority deserves to be treated as the whole of things' imply in the context of Islamic finance?
Illiquid assets should be a considerable proportion in a combination with liquid assets
Why is the proportion of illiquid assets important in asset-backed transactions according to the text?
To avoid the riba aspect and ensure transactions are permissible
What is the significance of the condition that the price of a combination should exceed the value of its liquid amount in Islamic finance?
To prevent transactions from falling into riba category
In Islamic finance, why is it important for companies to limit interest (or unlawful gains) to less than 5% of total revenue?
To ensure compliance with Shariah principles
What financial criterion must a company meet to be included in an Islamic share index according to the text?
Ensuring interest (or unlawful gains) represent less than 5% of total revenue
What shift is highlighted in the text regarding ownership and liability?
Shift from ownership to liability
What is the main legal consequence of differentiating between personal shareholder rights and company real rights?
Consequential impact on Islamic law
Why is covering the concept of dealing in shares and stock market important in academic debates?
To protect investors and ensure compliance with Islamic principles
What aspect of companies needs to be considered to be listed on the London Stock Exchange according to the text?
Meeting certain conditions
What additional research area does the text suggest beyond fiqh and legal aspects of shares and corporations?
Development of Islamic indices
What concept has not been thoroughly debated in academic works regarding shares and corporations?
Permissibility of shares in Islamic context
What proposed model has not been discussed according to George (2003) in the text?
Islamic Securities House within secular stock exchanges
Why is it important to differentiate between personal shareholder rights and company real rights?
To understand the impact on Islamic law
Why is it essential for investors to be protected and investments canalized in the proper Islamic direction?
To ensure compliance with ethical standards
What area warrants parallel research along with the fiqh and legal aspects of shares?
Development of Islamic indices
Learn about how maqasid al-Shari’ah, which aims to promote the wellbeing of individuals, is important in risk management. Discover how initiatives related to Shari’ah rules and guidelines play a crucial role in managing risk effectively.
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