Fitch Learning CISI Risk in Financial Services Exam
1. What is the primary principle that distinguishes Islamic finance from conventional finance?
A) Profit maximization
B) Prohibition of interest
C) Unlimited risk exposure
D) 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.
2. Which term describes uncertainty or excessive risk in a transaction that is not permitted in
Islamic finance?
A) Mudarabah
B) Gharar
C) Murabaha
D) 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.
3. Which document is primarily used as the basis for Sharia law in Islamic finance?
A) The Constitution
,Fitch Learning CISI Risk in Financial Services Exam
B) The Bible
C) The Quran
D) The Hadith
Correct Answer: C
Explanation: The Quran is the primary source of guidance for Sharia law and is central to Islamic
financial principles.
4. What does the term “Murabaha” refer to in Islamic finance?
A) A form of profit-sharing arrangement
B) A cost-plus financing arrangement
C) A leasing contract
D) 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.
5. In a Mudarabah contract, which party is considered the entrepreneur providing expertise?
A) The rabb-ul-mal
B) The financier
C) The mudarib
,Fitch Learning CISI Risk in Financial Services Exam
D) 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).
6. Which Islamic financial product is based on a partnership where all partners share profit and
loss?
A) Murabaha
B) Musharakah
C) Ijara
D) Sukuk
Correct Answer: B
Explanation: Musharakah is a joint venture partnership where all partners contribute capital
and share in both the profit and loss.
7. What is Ijara commonly used for in Islamic finance?
A) Asset-backed financing through leasing
B) Profit-sharing investments
C) Construction and manufacturing
D) Debt consolidation
, 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.
8. Istisna’a financing is primarily used for which sector?
A) Real estate leasing
B) Manufacturing and construction
C) Microfinance
D) 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.
9. Sukuk are often compared to which conventional financial instrument?
A) Derivatives
B) Insurance policies
C) Bonds
D) 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.
1. What is the primary principle that distinguishes Islamic finance from conventional finance?
A) Profit maximization
B) Prohibition of interest
C) Unlimited risk exposure
D) 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.
2. Which term describes uncertainty or excessive risk in a transaction that is not permitted in
Islamic finance?
A) Mudarabah
B) Gharar
C) Murabaha
D) 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.
3. Which document is primarily used as the basis for Sharia law in Islamic finance?
A) The Constitution
,Fitch Learning CISI Risk in Financial Services Exam
B) The Bible
C) The Quran
D) The Hadith
Correct Answer: C
Explanation: The Quran is the primary source of guidance for Sharia law and is central to Islamic
financial principles.
4. What does the term “Murabaha” refer to in Islamic finance?
A) A form of profit-sharing arrangement
B) A cost-plus financing arrangement
C) A leasing contract
D) 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.
5. In a Mudarabah contract, which party is considered the entrepreneur providing expertise?
A) The rabb-ul-mal
B) The financier
C) The mudarib
,Fitch Learning CISI Risk in Financial Services Exam
D) 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).
6. Which Islamic financial product is based on a partnership where all partners share profit and
loss?
A) Murabaha
B) Musharakah
C) Ijara
D) Sukuk
Correct Answer: B
Explanation: Musharakah is a joint venture partnership where all partners contribute capital
and share in both the profit and loss.
7. What is Ijara commonly used for in Islamic finance?
A) Asset-backed financing through leasing
B) Profit-sharing investments
C) Construction and manufacturing
D) Debt consolidation
, 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.
8. Istisna’a financing is primarily used for which sector?
A) Real estate leasing
B) Manufacturing and construction
C) Microfinance
D) 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.
9. Sukuk are often compared to which conventional financial instrument?
A) Derivatives
B) Insurance policies
C) Bonds
D) 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.
