Associate Qualification in Islamic Finance (AQIF) Practice Exam

1. Introduction to Islamic Finance • Islamic Finance Principles o Definition and key concepts of Islamic finance o Overview of Shariah Law and its relevance in Islamic finance o Core principles: Prohibition of interest (Riba), risk sharing, and ethical investments o The role of Islamic finance in global financial markets • Key Features of Islamic Finance o Distinction between Islamic finance and conventional finance o Importance of asset-backed transactions o Prohibition of speculation (Gharar) and gambling (Maysir) • Sources of Islamic Law (Shariah) o Qur’an, Hadith, Ijma (consensus), and Qiyas (analogy) o Role of Shariah boards and scholars in Islamic finance institutions ________________________________________ 2. Islamic Finance Products and Instruments • Islamic Banking Products o Murabaha (Cost-plus financing) o Mudarabah (Profit-sharing) o Musharakah (Partnership-based financing) o Ijarah (Leasing) o Istisna (Manufacturing contract) o Salam (Forward sale contract) o Tawarruq (Commodity murabaha) o Sukuk (Islamic bonds): Structure and types of Sukuk • Islamic Insurance (Takaful) o Takaful concept and types (family, general, and re-Takaful) o Differences between Takaful and conventional insurance o Principles of Takaful: mutuality, risk-sharing, and Shariah-compliance ________________________________________ 3. Financial Transactions in Islamic Finance • Asset-Backed Financing o Definition and importance of tangible assets in Islamic finance o Types of assets that can be used in Islamic finance contracts • Prohibition of Riba (Interest) o The concept of Riba and its implications in Islamic finance o The difference between Riba al-Nasi’a (usury) and Riba al-Fadl (trade-related interest) o Shariah-compliant alternatives to interest-based financing • Risk Sharing and Profit Loss Sharing (PLS) o Concepts of Mudarabah and Musharakah o How Islamic financial institutions structure risk-sharing contracts ________________________________________ 4. Shariah Compliance in Islamic Finance • Shariah Governance and Compliance Framework o Role and function of Shariah supervisory boards in Islamic financial institutions o Shariah audit and compliance process o Certification and validation of products for Shariah compliance • Shariah Principles in Banking Operations o Ethical investment screening and criteria o Prohibition of investments in haram (forbidden) activities (e.g., alcohol, gambling, pork) • Shariah Risk Management o Assessing and managing Shariah non-compliance risks o Addressing conflicts between Shariah compliance and business objectives ________________________________________ 5. Islamic Financial Institutions and their Role • Types of Islamic Financial Institutions o Islamic banks and their functions o Islamic investment companies o Islamic insurance companies (Takaful) o Islamic investment funds • Regulatory Bodies and Standards in Islamic Finance o International organizations: IFSB (Islamic Financial Services Board), AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) o Role of central banks in regulating Islamic finance o National and international legal frameworks for Islamic financial institutions • Islamic Finance in Different Jurisdictions o Overview of Islamic finance in the Middle East, Southeast Asia, and Western countries o Key market players and jurisdictions promoting Islamic finance (e.g., Dubai, Malaysia, Bahrain) ________________________________________ 6. Islamic Capital Markets • Sukuk (Islamic Bonds) o Types of Sukuk (e.g., Ijarah, Mudarabah, Musharakah Sukuk) o Structure and benefits of Sukuk for both issuers and investors o Regulatory frameworks and global market growth for Sukuk • Islamic Equity Investments o Shariah-compliant equity screening criteria o The concept of Shariah-compliant indexes and Islamic equity funds • Islamic Derivatives and Structured Products o Overview of Islamic financial derivatives (e.g., Islamic forward contracts, options) o Structure and uses of Shariah-compliant derivatives ________________________________________ 7. Islamic Finance and the Global Economy • Islamic Finance in a Global Context o The role of Islamic finance in global economic development o The impact of Islamic finance on poverty alleviation and economic growth in Muslim-majority countries o Islamic finance as an alternative to conventional finance in times of economic crises • Challenges and Opportunities in Islamic Finance o Challenges in standardizing Islamic financial products across borders o The potential for Islamic finance in non-Muslim countries o The role of Islamic finance in fostering ethical investments and sustainable finance • Future of Islamic Finance o Growth prospects for Islamic financial institutions and markets o The integration of fintech and Islamic finance o The evolving regulatory landscape and the role of innovation ________________________________________ 8. Ethical and Social Dimensions of Islamic Finance • Social Responsibility in Islamic Finance o The concept of Zakat (almsgiving) and its role in wealth redistribution o Islamic finance’s contribution to social justice and poverty reduction o Ethical investing and the importance of social impact in Islamic finance products • Environmental, Social, and Governance (ESG) Considerations o The relationship between Islamic finance and ESG principles o Sustainability and green finance in the Islamic financial sector o Role of Islamic finance in achieving the United Nations’ Sustainable Development Goals (SDGs) ________________________________________ 9. Case Studies and Practical Applications • Case Studies of Islamic Finance Institutions o Success stories of Islamic banks and financial institutions o How Islamic finance is being applied in different industries (e.g., real estate, energy, healthcare) • Emerging Trends in Islamic Finance o The role of digital finance and blockchain technology in Islamic finance o The development of Islamic fintech and its potential impact on traditional financial systems o Growth of Islamic finance in the non-Muslim world