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Our Mission is to provide Muslims world wide with useful and practical information about Islamic investment, Islamic banking, Islamic finance, and Islamic insurance consistent with their beliefs and values.Our vision is to help Muslims help themselves, help each other and help others by growing their wealth, and serving their financial needs in an Islamically Correct® way.

Is This Murabahah?

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: Is the following transaction classified as Murabahah? If not, is it permissible? I invest a certain sum of money in a company to procure certain raw materials for a fixed rate of return and for a turnaround time of one month.

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Funds for Retirement

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: is it okay to put money away for retirement? if so, do you recommend any specific type of funds?Answer: Yes, it is OK to put money away for retirement. In today's world, where the extended family system is the exception rather than the rule, it is important that people provide for their retirement years. It's fine to trust in Allah.

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Investing in the Financial Sector

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: (South America) I was particularly interested to know what kinds of sectors islamic investors should avoid, like the financial sector. I assume that some smaller banks generate more revenue from profits arising investment returns on deposits received.

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Hedging

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: Why is hedging haram?Answer: As a method for protecting a profit position from risk, it is easy to understand why hedging is popular. In conventional finance, risk-hedging takes the form of derivatives,swaps, futures, options, and other risk-shifting devices.

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Financing Alternatives

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: Are there any alternatives that can be used today by compaines, when they need to borrow money to fund project other than from (interest bearing means) i.e. the banks and the capital markets? Answer: Alternatives certainly exist. When companies need influxes of liquidity, they generally resort to one of two options: they seek loans, or they issue bonds or more stock.

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Rationale for the Prohibition of Riba

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: (South America) While I understand that the shariah is strongly opposed to riba inall its forms, I was condering what the rationale for this is. The Quranic text and prophetictradition are clear in prohibiting it but I haven't yet seen a clear explanation of why it isproblematic. I also fail to see WHY asset-backed ownership is the only permissible type in Islam

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Ijab and Qabul

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: I had a question about investing in the stock market I have heard that it was questionablebecause of a condition that is necessary in an islamic contract - that of ijaab and qabool (offerand acceptance). I have heard that when people are in a contract with one another (in any form,including as shares of a company), that a necessary element in the islamic contract is that the

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Covered Options

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: Is covered option Islamic? Why or why not? Answer: An option, whether covered or naked, differs fundamentally from a stock. A stock representsa share in ownership, equity, of a real company producing goods or services and generally contributingto the economy in a substantial manner. When you buy stock, you help to raise capital for business,

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Common and Preferred Stock

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: My question has to do with preferred stock and whether or not they are halal. In the lesson it mentioned that those that pay dividends are guaranteed, so it is not allowed. This is true of cumulative preferreds, but regularly "non-cumulative preferreds" only pay dividends when the company has earnings. My question is, the security haram if it is guaranteed, or is it haram if it pays a fixed dividend?

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Purifying Investment Income

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: How exactly is investment income 'purified' and how is the amount that comes from interest calculated? Answer: Please review Lesson Six: Zakah and Purification, particularly the section entitled: "Purification as a Fiscal Responsibility". You may also want to try the exercise that is given there.

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Leasing Haram or Halal?

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: In this chap. it states that leasing is haram. Because the contract is kept suspensefor a certain amount of years. I've always thought that islamic banks do conduct their businessthis way. For example, say that you are leasing a car from a financial institution. Doesnt theislamic bank buy ther car and then they lease it to you for a set amount of years, and when the

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Purification of Impure Income

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: In lesson 1 we learnt how a Muslim investor may trade in common stock so long as thepreconditions apply. In the section "The debate over Riba" it was clearly mentioned that whena company derives benefit from interest, the Muslim investor will be responsible for cleansinghis holdings. My question is : 1) How can one work out what percentage of riba is involved in their money ? It would seem

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The Difference Between Bank Deposits and Stocks

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: My understanding was that only in extreme cases should a Muslim tolerate riba.For example, scholars have allowed Muslims to hold bank accounts even if they incur intereston the pretext that they cleanse their money from the interest accumulated. In the case of bank accounts it could be accounted as a need since it would almost beimpracticle for one to keep his money at home in paper form. Thus the need for a bank account

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Difference Between Murabahah and Interest

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: I am having trouble understanding the difference between murabahah and interest. What isthe difference between buying a car with a fixed rate of profit in installments and paying a carnote that involves riba? Aren't loans that include riba at a fixed rate also? Can the middle personcharge a higher price because the payment is in installments? Answer: There is in fact a world of difference between the two. Unfortunately, though, because the end

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Short Term Speculation (Day Trading)

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: Is there an area where buying and selling stock, even if it is acceptable stock, when itbecomes like gambling? Especially when it is short-term speculation. If it is, then where is thedividing line? And is day trading allowed by the Shari'ah in the qualifying stocks?Answer: There is a well known hadith of the Prophet, upon him be peace, which is also an important

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Understanding Different Rulings

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: How does one goes about understanding the ruling of the different schools of thought (madhaahib) when so few people (in my world) know about the subject of finance?Answer: This is a very good question. In fact, there are very few people qualified to help out in these matters at the present time. This is why Islamic financial institutions, if they are serious about Shari`ah compliance, will be sure to appoint Shari`ah Supervisory Boards.

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Shariah Board Scholars

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: Who are the scholars of the shari'ah board. What are their orientations, especially when it comes to interpreting the different schools of thought?Answer: The scholars of the Dow Jones Islamic Market Index Shari`ah Board are featured, withtheir bios, at the DJIMI website. Obviously, they are a group of very accomplished scholars.With regard to their legal orientation, the members of the Shari`ah Board represent nearly all

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Contract Components

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: I asked previously and received no reply what are the essential components to a contract according to the different madhhabs? Also, some say that the offer and acceptance element of the contract is not present if you are a shareholder because you have a very limited say. is this accurate? Answer: The classical jurists are in agreement that every legal contract is composed of a pillar

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Chance and the Almighty

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: First, Praise be to Allah for this course, the designers and instructors of it. I pray Allah continue to bless each of you. My question pertains to the interpretation of verses 3:130 and 3:132, not to be argumentative or dogmatic, but because the verses were used in the lessons. Since Allah leaves nothing to "chance," and with Him there is no such thing as "chance,"

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