Scholar Answers

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: In the topic of Gharar, could it be safe to say that investing in the stock market is Gharar? There is a certain amount of risk involved in investing in the stock market without any assured returns so does this qualify as Gharar?

Answer: In section five of Lesson Two I wrote:

"Obviously, if we equate gharar to uncertainty and risk, then these are things

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: I would like to know if it is halal to lease from a kufar financialinstitution?

Answer: If a lease can be structured in a way that conforms with Shari`ah principles (as in an ijarah contract), it will be lawful, regardless of whether the lease originates from a conventional financial institution or otherwise. Many Islamic banks, investors, and financial institutions participate in leasing operations that comply with Shari`ah principles and yet involve conventional financial institutions.

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: If in mudarabah partnership, mudarib has had some losses and inanother transaction he reaps profit. This means that profit should be taken to offset thelosses first and the remaining profit, if any, can be distributed to all the parties according to the pre agreed proportion. My question is which losses should be offset? Losses in capital owned by robbul maal or loss in mudarib's effort?

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: What is the Islamic view on employee stock options?

Answer: This is one which many Muslims puzzle over, and with good reason. To begin with, the term "options" often leads to confusion because most Muslims recognize it as perhaps having to do with the options market; and the buying and selling of options is clearly prohibited owing to the element of uncertainty, or gharar, at the time of contracting. (For a detailed discussion of gharar, see: "Lesson Two, Riba and Gharar").

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: What is the best way to invest in a 401(k) plan. Are we allowed to invest if Islamic Mutual Funds are not listed on the Mutual Funds list. How should we convince the Employer to have Islamic Mutuals Funds.

Answer: We are not in the best position to answer the first part of your question as we lack the proper financial advisory credentials. If enough company employees request Shari'ah compliant investment vehicles (resulting in respectable amount of assets for Shari'ah permissible management), then the employer will at least take notice of the demands. The key issue is for Muslim employees to begin making these demands, and then to point to the direction of, say, the Dow Jones Islamic Market Index as a universe of Shari'ah

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: Can riba money be used to pay off a riba loan? If so, would this be considered purification of wealth?

Answer: It was explained in the section on Purification (Lesson Six, Section Six) thatincome from interest must be given away, and that? "as a general principle, sincethe money being distributed represents impure income, it must not be used in a way that

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: As a follow-up to Sarah's question on company granted stock options, I'd like to ask about the Zakat that is due on gains received via these options. In certain cases (as with some of the recent IPO's in the tech sector), the compensation achieved fromstock options can be huge -dwarfing the other benefits an employee receives (i.e.salary). According to at least one booklet I've read about Zakat calculation, the rate

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: In the second lesson, there is a reference to Nabil A. Saleh's Unlawful Gain and Legitimate Profit in Islam, London 1992. This is the second edition. Can you tell me whether it is substantially improved from or better than the first edition? I ask because I own a copy of the first edition. Thank you.

Answer: The only copy I have is of the second edition and so I am unable to compare. Likewise, there is nothing in the Introduction to indicate any major changes or

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: What is the consensus about investing in Israeli companies, or companies that invest in Israel? Should those not be excluded by the Shari`ah screens like companies that deal with Alcohol, pork, banks, etc...? Salam R Tarek

Answer: To our knowledge there is no Shari'ah dialogue involving investment prohibition against Israeli companies or companies that invest in Israel. The Shari'ah screens do not take political background/identity or religious affiliation into account. The Prophet himself, upon him be peace, is known to have transacted with people of other

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: My question is, even though certain companies, ie CitiBank, GE, AOL become un-investable in due to the Shariah screen, dont you think that if Muslims are going to change the way these companies do business, then they should become shareholders andhelp steer the direction of companies that do conduct Haraam activities. Also, don't youthink that by investing in companies like GE, and Disney etc etc, Muslims can help the