QUESTION 2 (30 MARKS) A

Subject:BusinessPrice:9.82 Bought3

Share With

QUESTION 2 (30 MARKS) A. Malik b. Aus b. al-Hadathan reported: I came saying who was prepared to exchange dirhams (for my gold), whereupon Talha b. Ubaidullah (pbuh) (as he was sitting with 'Umar b. Khattib) said: Show us your gold and then come to us (at a later time). When our servant would come we would give you your silver (dirhams due to you). Thereupon 'Umar b. alKhattib (pbuh) said: Not at all. By Allah, either give him his silver (coins) or return his gold to him, for Allah's Messenger (SAW) said: Exchange of silver for gold (has an element of) interest in it. Except when (it is exchanged) on the spot; and wheat for wheat is an interest unless both are handed over on the spot: barley for barley is interest unless both are handed over on the spot; dates for dates is interest unless both are handed over on the Spot.

 a. By referring to the hadith, elucidate the business transaction model as proposed by Prophet SAW. (10 marks) b. Justify why riba is prohibited in the Quran and it is judged differently from legitimate trade. (10 marks) 

B. Risk is defined as uncertainty about a future outcome. Risk also can be classified based on market risk, business risk, financial risk and others risk. Evaluate the implications of credit risk and Shariah non-compliance risk in Islamic bank. Support your answer with appropriate examples. (10 marks)