Below are all 14 questions with their correct answers and explanations. Enable JavaScript for the interactive self-assessment experience with scoring and progress tracking.
Overview— question 1
What are the three core principles of Islamic finance that determine whether trading is halal or haram?
ARiba, Gharar, Maysir ✓
BZakat, Hajj, Sawm
CSpot, Futures, Options
DBid, Ask, Spread
Explanation
Riba (interest/usury), Gharar (excessive uncertainty), and Maysir (gambling) are the three lenses through which Islamic scholars evaluate financial transactions. Every trading practice must pass these three tests.
→ Read the full guideForex— question 2
A swap-free Islamic forex account eliminates overnight interest. What is the most Sharia-compliant fee model used by brokers like IC Markets and Pepperstone?
AFixed administration fee per lot held overnight ✓
BWidened spread on Islamic accounts
CPercentage-based management fee
DHigher commission per trade
Explanation
The fixed administration fee model charges a flat rate per lot regardless of position direction or interest rate differentials — no riba, just a transparent service charge. AAOIFI Shariah Standard No. 21 endorses this structure.
→ Read the full guideForex— question 3
To stay firmly within the "spot exchange" framework, most Islamic scholars recommend:
AHolding positions for exactly 3 days
BClosing positions before rollover at 5 PM EST ✓
COnly trading major currency pairs
DUsing a VPS for automated trading
Explanation
Day trading — opening and closing positions within the same trading day — removes any doubt about swap exposure. Closing before the 5 PM EST rollover ensures no overnight charges, aligning with the spot exchange principle.
→ Read the full guideStocks— question 4
For a stock to be Sharia-compliant, its interest-bearing debt must not exceed what percentage of market capitalization?
Explanation
Under AAOIFI screening criteria, total interest-bearing debt must not exceed 33% of market capitalization. Stocks exceeding this threshold — such as highly leveraged financial institutions — are screened out.
→ Read the full guideStocks— question 5
Which of these ETF types screens holdings for Sharia compliance?
ASPY (S&P 500 ETF)
BQQQ (NASDAQ-100 ETF)
CHLAL (Wahed FTSE USA Shariah ETF) ✓
DDIA (Dow Jones ETF)
Explanation
HLAL tracks the FTSE USA Shariah Index, screening out companies with non-compliant debt ratios, haram revenue streams (alcohol, gambling, conventional finance), and excessive cash holdings. SPUS and UMMA are other Sharia-compliant ETF options.
→ Read the full guideCrypto— question 6
Why is crypto harder to classify under Islamic finance than traditional assets?
ABecause it is digital and intangible
BBecause it lacks a central issuing authority and serves multiple roles (currency, asset, speculative vehicle) ✓
CBecause all scholars agree it is haram
DBecause it cannot be physically delivered
Explanation
Crypto defies simple classification — it can function as a currency (medium of exchange), an asset (store of value), or a speculative vehicle depending on usage. Scholarly opinions differ precisely because these roles blur traditional fiqh categories.
→ Read the full guideCrypto— question 7
Which crypto trading practice is almost universally considered problematic by Islamic scholars?
ASpot buying Bitcoin
BHolding Ethereum long-term
CLeveraged futures trading ✓
DUsing DEX aggregators
Explanation
Leveraged futures involve margin, financing charges, and settlement structures that scholars almost universally agree contain elements of riba, gharar, and maysir simultaneously. Spot trading without leverage is the most widely accepted approach.
→ Read the full guideBinary Options— question 8
Which of the three Islamic finance principles does binary options trading most directly conflict with?
ARiba only
BGharar only
CMaysir (gambling) — the all-or-nothing payout structure ✓
DNone — binary options are halal if done carefully
Explanation
The fixed all-or-nothing payout structure of binary options closely resembles a bet: one party gains exactly what the other loses without productive economic activity. This triggers maysir concerns. The short expiry times also amplify gharar.
→ Read the full guideBinary Options— question 9
What is the minimum win rate required to break even with a typical 80% binary options payout?
A50%
B55.56% ✓
C62.5%
D75%
Explanation
With an 80% payout, you need to win 55.56% of trades just to break even (theoretical). This is because losing trades cost 100% of the stake while winning trades return only 80% profit. Binary options have a built-in structural disadvantage.
→ Read the full guideSwap-Free Accounts— question 10
What is the key difference between a genuine Islamic swap-free account and a disguised one?
AThe broker's marketing language
BWhether the account is labeled "Islamic"
CThe fee structure — fixed admin fee vs. variable interest-based charges disguised under another name ✓
DThe minimum deposit required
Explanation
A genuine Islamic account charges a fixed, transparent administration fee. Some brokers disguise swap charges as "overnight fees" or "storage fees" that vary with interest rates — functionally identical to riba. Always verify with a small test position.
→ Read the full guideZakat— question 11
What is the nisab threshold for zakat — the minimum wealth you must hold before zakat becomes obligatory?
A$1,000 in any currency
B85 grams of gold (or 595 grams of silver) ✓
C10% of annual income
DOne Bitcoin
Explanation
The Prophet ﷺ set the nisab at 20 dinars of gold (85g) or 200 dirhams of silver (595g), as recorded in Sahih al-Bukhari. Most contemporary scholars — including Yusuf al-Qaradawi in Fiqh al-Zakah — recommend the gold standard. Check the live calculator on our zakat page for the current dollar value.
→ Read the full guideZakat— question 12
You have an open forex position showing $5,000 in unrealized profit on your zakat date. Do you include this in your zakat calculation?
ANo — only closed/settled trades count
BYes — unrealized gains are part of your net wealth and are zakatable ✓
COnly if the position is older than 30 days
DOnly 50% of unrealized gains are zakatable
Explanation
On your zakat date, all open positions are valued at market price. Unrealized profit is wealth you control — it counts toward nisab and is subject to the full 2.5%. The fact that you haven't "closed" the trade doesn't matter.
→ Read the full guideHalal ETFs— question 13
Why are conventional ETFs like SPY and QQQ not Sharia-compliant?
AThey are too volatile for Muslim investors
BThey include stocks from non-compliant sectors like conventional banking, alcohol, and gambling ✓
CThey charge management fees which count as riba
DThey are not available on Islamic exchanges
Explanation
Conventional ETFs track broad indexes that include financial stocks earning from interest, alcohol producers, gambling companies, and other non-compliant businesses. Islamic ETFs like HLAL and SPUS track Sharia-screened versions of the same indexes.
→ Read the full guideHalal ETFs— question 14
What happens to the dividend income from non-compliant sources within a halal ETF?
AIt is automatically excluded — you never receive it
BThe fund provider calculates a purification ratio and you donate that portion to charity ✓
CIt is reinvested into more halal stocks
DYou pay extra zakat to offset it
Explanation
Even Sharia-compliant ETFs may receive incidental non-compliant income (e.g. interest on cash reserves). The fund provider publishes an annual purification ratio — multiply your dividends by that percentage and donate the result to charity. This is purification, not zakat or sadaqah.
→ Read the full guide