Scholar Answers

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.

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

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

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,

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?

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.

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

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

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

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