CIFE Islamic Capital Markets

Question 1

What are the main types of Sukuk structures used in the UAE capital markets?

Accepted Answer

Ijara Sukuk, Mudaraba Sukuk, Musharaka Sukuk, Murabaha Sukuk, and Wakala Sukuk among others

Answer

The UAE market uses multiple Sukuk structures: Ijara (lease-based), Mudaraba (profit-sharing), Musharaka (partnership), Murabaha (cost-plus), and Wakala (agency), each based on different underlying Islamic contracts.

Question 2

What is the role of the AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions)?

Accepted Answer

An international standard-setting body that develops Sharia, accounting, auditing, governance, and ethics standards for Islamic financial institutions

Answer

AAOIFI is an international autonomous body that develops and publishes Sharia standards, accounting standards, auditing standards, governance standards, and ethics standards for the Islamic financial services industry.

Question 3

What Sharia screening criteria must be met for stocks to be included in Islamic indices?

Accepted Answer

Both qualitative screening (permissible business activity) and quantitative screening (debt-to-assets, interest income, and liquid assets ratios below specified thresholds)

Answer

Islamic index screening requires: qualitative checks (no haram primary business), plus quantitative thresholds typically requiring total debt/assets <33%, interest income/revenue <5%, and cash+receivables/assets <33%.

Question 4

What is the concept of purification (Tazkiyah) for Islamic investment returns?

Accepted Answer

The process of cleansing investment returns by donating the proportion of income derived from non-compliant activities to charity

Answer

Income purification requires investors to calculate and donate to charity the portion of returns attributable to non-compliant activities (such as interest income) of companies in their portfolios, purifying their overall returns.

Question 5

What is the S&P/Hawkamah ESG Pan Arab Index and its relevance to Islamic finance?

Accepted Answer

It demonstrates the overlap between ESG (Environmental, Social, Governance) investing and Islamic finance principles in the Arab region

Answer

This index highlights the natural alignment between ESG investing and Islamic finance — both emphasize ethical business practices, social responsibility, and good governance, making them complementary approaches.

CIFE Islamic Finance Practice Test

CIFE Islamic Finance Practice Test

CIFE Islamic Capital Markets