In Islamic finance, which practice is generally prohibited?
Correct answer: A. Charging predetermined interest on a loan
- A. Charging predetermined interest on a loan
- B. Sharing profit from a lawful business
- C. Buying and selling a real asset
- D. Leasing an identified piece of equipment
Explanation
Islamic finance generally prohibits riba, commonly understood in this context as predetermined interest on a loan. Profit sharing, trade in real assets, and leasing can be permissible when their conditions are satisfied.
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Business finance covers capital requirements, sources of funds, budgeting, cash flow, investment decisions and basic financial statements and ratios. Banking includes commercial bank functions, deposits, loans, credit creation, interest and the role of a central bank, including its monetary policy and regulatory functions.
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