1. Islamic banking operates on the principle of:
(A) Arbitrary profit
(B) Charging interest (Riba)
(C) Fixed interest only
(D) Profit and loss sharing
2. Riba in banking is:
(A) Optional interest
(B) Encouraged for growth
(C) Strictly prohibited
(D) Charity-based loan
3. Mudarabah is:
(A) Charity fund
(B) Fixed interest loan
(C) Profit-sharing partnership where one provides capital and other manages
(D) Government bond
4. Musharakah refers to:
(A) Bank guarantee
(B) Fixed interest loan
(C) Charity fund
(D) Joint partnership where all partners contribute capital and share profit/loss
5. Ijarah in Islamic finance means:
(A) Profit-free investment
(B) Interest-based loan
(C) Charity only
(D) Leasing or hiring
6. Sukuk are:
(A) Fixed deposit certificates only
(B) Conventional bonds
(C) Islamic bonds compliant with Shariah
(D) Government tax
7. Islamic banks avoid:
(A) Zakat
(B) Profit-sharing only
(C) Trade
(D) Interest (Riba), Gharar (uncertainty), and Haram activities
8. Murabaha is:
(A) Cost-plus financing for trade or assets
(B) Profit-free loan
(C) Charity contribution
(D) Leasing only
9. Islamic banks emphasize:
(A) Risk-sharing and ethical investment
(B) Interest maximization
(C) Arbitrary lending
(D) Monopoly
10. Takaful in Islamic finance is:
(A) Interest-based banking
(B) Conventional insurance
(C) Shariah-compliant cooperative insurance
(D) Profit-only investment
11. Gharar refers to:
(A) Excessive uncertainty or ambiguity in contracts
(B) Profit-sharing
(C) Fixed interest
(D) Charity
12. Islamic banking prohibits investment in:
(A) Alcohol, gambling, and pork-related businesses
(B) Real estate only
(C) Manufacturing
(D) Agriculture only
13. Mudarabah contract involves:
(A) Equal capital only
(B) One party provides capital, another provides management
(C) Charity fund only
(D) Fixed repayment only
14. Profit in Musharakah is shared:
(A) As per pre-agreed ratio
(B) Arbitrary by the bank
(C) Only to capital provider
(D) Only to manager
15. Islamic banks fund businesses through:
(A) Only loans with interest
(B) Equity-based financing
(C) Fixed deposits only
(D) Monopoly lending
16. Ijarah can be applied to:
(A) Vehicles, equipment, or real estate leasing
(B) Only monetary loans
(C) Interest-based deposits
(D) Charity projects only
17. Sukuk holders receive:
(A) Charity
(B) Fixed interest
(C) Profit from underlying assets, not interest
(D) Government aid
18. Murabaha requires:
(A) Lending money with interest
(B) Bank purchasing asset and selling to client at marked-up price
(C) Charity
(D) Leasing only
19. Islamic banks encourage:
(A) Any profitable venture
(B) Ethical and socially responsible investments
(C) Interest-based loans
(D) Exploitative trade
20. Takaful is based on:
(A) Interest insurance
(B) Mutual cooperation and shared risk
(C) Arbitrary profit
(D) Bank monopoly
21. Gharar contracts are avoided because:
(A) They are charitable
(B) They increase profit
(C) They reduce risk
(D) They create uncertainty and potential injustice
22. Zakat can be collected by:
(A) Private lenders only
(B) Only government
(C) Conventional banks
(D) Islamic banks as part of wealth management
23. Riba-free banking ensures:
(A) Justice and fairness in financial dealings
(B) Maximum interest profit
(C) Monopoly lending
(D) Arbitrary taxation
24. Mudarabah profit is shared:
(A) Arbitrary by manager
(B) As per pre-agreed ratio, losses borne by capital provider
(C) Only to bank
(D) Only to client
25. Musharakah risk is:
(A) Only to bank
(B) Only to investor
(C) Shared by all partners
(D) Only to manager
26. Ijarah revenue is earned by:
(A) Profit-free trade
(B) Lending money with interest
(C) Charity only
(D) Leasing asset for a fixed or variable rent
27. Sukuk represents:
(A) Cash only
(B) Debt with interest
(C) Charity fund
(D) Ownership in tangible assets or projects
28. Islamic banks avoid speculation because:
(A) It encourages trade
(B) It increases profit
(C) It reduces taxes
(D) It involves excessive uncertainty (Gharar)
29. Murabaha ensures:
(A) Profit-free trade
(B) Arbitrary lending
(C) Charity only
(D) Asset-backed financing without interest
30. Islamic banking emphasizes:
(A) Speculation only
(B) Riba-based loans
(C) Monopoly profit
(D) Equity-based financing and ethical trade
31. Takaful members contribute to:
(A) Bank profit only
(B) Interest fund
(C) A pool to cover members’ losses
(D) Monopoly lending
32. Gharar is prohibited to:
(A) Reduce wealth
(B) Increase bank profit
(C) Prevent injustice and uncertainty
(D) Encourage speculation
33. Zakat collection by banks promotes:
(A) Interest-based growth
(B) Maximum profit
(C) Monopoly lending
(D) Efficient wealth redistribution
34. Riba is prohibited to:
(A) Avoid exploitation and injustice
(B) Maximize profits
(C) Reduce equity
(D) Fund trade only
35. Trade financing in Islamic banks is done through:
(A) Murabaha or Musharakah contracts
(B) Loans with interest
(C) Arbitrary lending
(D) Monopoly
36. Ijarah allows:
(A) Use of asset for rent without transferring ownership
(B) Lending with interest
(C) Charity only
(D) Speculative trading
37. Sukuk profit is based on:
(A) Performance of underlying asset, not interest
(B) Fixed interest
(C) Arbitrary profit
(D) Bank monopoly
38. Mudarabah loss is borne by:
(A) Bank only
(B) Manager only
(C) Capital provider, unless due to negligence of manager
(D) Client only
39. Musharakah can be applied to:
(A) Charity only
(B) Loans with interest only
(C) Business ventures, real estate, and projects
(D) Government tax only
40. Islamic banking promotes:
(A) Exploitation and Riba
(B) Ethical finance, risk-sharing, and social welfare
(C) Monopoly profit
(D) Arbitrary lending
41. Takaful ensures:
(A) Interest profit
(B) Mutual protection among participants
(C) Arbitrary lending
(D) Speculation
42. Gharar-free contracts:
(A) Promote speculation
(B) Increase interest
(C) Protect parties from uncertainty
(D) Encourage Riba
43. Zakat management in banks:
(A) Fund interest loans
(B) Increases bank profit
(C) Supports monopoly
(D) Helps channel funds to rightful beneficiaries
44. Riba-free banking contributes to:
(A) Monopoly profit
(B) Exploitation
(C) Justice, equality, and economic stability
(D) Arbitrary lending
45. Murabaha is used for:
(A) Interest loan
(B) Asset purchase and resale with pre-agreed profit
(C) Charity fund
(D) Leasing only
46. Islamic finance prohibits:
(A) Partnerships
(B) Real estate
(C) Trade
(D) Investments in Haram industries
47. Sukuk holders have:
(A) Ownership rights in underlying assets
(B) Only interest
(C) Charity only
(D) Government bond rights only
48. Ijarah differs from conventional leasing because:
(A) It charges interest
(B) It is Shariah-compliant and avoids interest
(C) It is arbitrary
(D) Only for banks
49. Mudarabah promotes:
(A) Investment and entrepreneurship
(B) Only charity
(C) Interest-based lending
(D) Speculation
50. Overall, Islamic banking aims to:
(A) Exploit customers
(B) Maximize interest profit
(C) Provide Shariah-compliant, ethical, and socially responsible financial services
(D) Fund monopolies only