Fitch Learning CISI Risk in Financial Services Exam

Fitch Learning CISI Risk in Financial Services Exam

• What is the primary principle that distinguishes Islamic finance from conventional finance?
• Profit maximization
• Prohibition of interest
• Unlimited risk exposure
• Fixed rates of return

Correct Answer: B

Explanation: Islamic finance is fundamentally different because it strictly prohibits riba (interest), ensuring that transactions comply with Sharia law.

• Which term describes uncertainty or excessive risk in a transaction that is not permitted in

Islamic finance?

• Mudarabah
• Gharar
• Murabaha
• Musharakah

Correct Answer: B

Explanation: Gharar refers to excessive uncertainty or ambiguity in the terms of a contract, which is not allowed in Islamic financial transactions.

• Which document is primarily used as the basis for Sharia law in Islamic finance?
• The Constitution 1 / 4

Fitch Learning CISI Risk in Financial Services Exam

• The Bible
• The Quran
• The Hadith

Correct Answer: C

Explanation: The Quran is the primary source of guidance for Sharia law and is central to Islamic financial principles.

• What does the term “Murabaha” refer to in Islamic finance?
• A form of profit-sharing arrangement
• A cost-plus financing arrangement
• A leasing contract
• A joint venture structure

Correct Answer: B

Explanation: Murabaha is a cost-plus financing arrangement where the seller discloses the cost and profit margin, making it compliant with Sharia principles.

• In a Mudarabah contract, which party is considered the entrepreneur providing expertise?
• The rabb-ul-mal
• The financier
• The mudarib 2 / 4

Fitch Learning CISI Risk in Financial Services Exam

• The sukuk holder

Correct Answer: C

Explanation: In a Mudarabah arrangement, the mudarib is the entrepreneur who manages the investment and shares profits with the financier (rabb-ul-mal).

• Which Islamic financial product is based on a partnership where all partners share profit and

loss?

• Murabaha
• Musharakah
• Ijara
• Sukuk

Correct Answer: B

Explanation: Musharakah is a joint venture partnership where all partners contribute capital and share in both the profit and loss.

• What is Ijara commonly used for in Islamic finance?
• Asset-backed financing through leasing
• Profit-sharing investments
• Construction and manufacturing
• Debt consolidation
• / 4

Fitch Learning CISI Risk in Financial Services Exam

Correct Answer: A

Explanation: Ijara is a leasing contract that permits the use of assets for a fee and is structured to be compliant with Islamic principles.

• Istisna’a financing is primarily used for which sector?
• Real estate leasing
• Manufacturing and construction
• Microfinance
• Agricultural production

Correct Answer: B

Explanation: Istisna’a is a contract for manufacturing or construction where payment is made progressively according to the stages of production.

• Sukuk are often compared to which conventional financial instrument?
• Derivatives
• Insurance policies
• Bonds
• Equities

Correct Answer: C

Explanation: Sukuk are Islamic bonds that represent ownership in a tangible asset, project, or investment, offering an alternative to conventional bonds.

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