01 Multiple choice — 12 questions
One attempt per option. A correct answer locks the question and explains itself; a wrong one only disables that option, so you can keep trying. The running score sits at the bottom of the page.
02 Written questions — 6 questions
Answer each in full before opening its model answer. The model answers are written at the length a full-mark response needs.
1. Explain what preferred shares and enjoyment shares are, and why each is forbidden.
Show model answer
Preferred shares give special rights to attract subscribers: a fixed profit whether the company profits or loses, recouping the full share value on liquidation, and more than one vote. They may not be issued: first, a fixed profit regardless of profit or loss is riba — it turns an owner into a lender; second, treating shareholders unequally contradicts the justice Islam requires.
Enjoyment shares have their nominal value repaid early, while the company still runs — typical of depleting businesses such as petroleum drilling, which refund shares annually and choose them by lottery. They are not permissible: once a holder recovers the value of their shares they are no longer a partner in the capital or the work, so any further profit is illegitimate money; and the lottery adds manipulation and uncertainty. Together: consuming others' wealth unjustly, plus gharar.
2. State the five conditions under which dealing in shares is permissible, with the reason for each.
Show model answer
1. Halal activity: the company's objectives and core business are lawful — shares in a company making alcohol or running usurious banks are impermissible, because its profits are unlawful and buying in is partnering in sin.
2. Clean of riba: the company does not deal in riba, even in some of its transactions.
3. Clear company: it is known and transparent, with clear integrity and financial health.
4. Not preferred shares: fixed profit is riba and unequal treatment is unjust.
5. Not enjoyment shares: no partnership is left after repayment, and the lottery adds gharar.
Mnemonic: “Halal, Clean, Clear, Not-P, Not-E.”
3. Explain the four values of a share and say which of them change, and why.
Show model answer
Nominal (par) value: the face value printed on the deed, the legal minimum price at which shares can be issued. It is fixed.
Issue value: the price at which shares are offered to the public in an IPO or a new issue; it is set at each issue.
Real value: assets minus liabilities — the share's actual financial worth. It changes with the company's profitability.
Market value: the current trading price on the exchange. It changes with supply and demand, speculation, and political and economic conditions.
Real value comes from the balance sheet, market value from the exchange (N.I.R.M.: printed → offered → worth → traded).
4. Define a share and explain its four characteristics.
Show model answer
Shares are deeds representing units of ownership in a company's capital. Each has an equal value, cannot be split, can be traded, and proves ownership rights as a shareholder; ownership can be public (exchange-traded) or private. A share is a deed of ownership, not a loan, so its owner shares in profit and loss.
Equal in value: the capital is divided into equal parts. Indivisible against the company: if several people share one share, only one of them represents them before the company. Tradable: shares can be sold, bought or traded. Nominal value: a stated value on the deed, set by law within a maximum or minimum limit (E.I.T.N.).
5. List the eight rights of an ordinary shareholder.
Show model answer
Ordinary shares are equal in value and give every holder equal rights, in the order a shareholder would use them:
(1) Remain in the company — no expulsion or forced taking of shares; (2) vote in the general assembly, one vote per share; (3) receive dividends; (4) dispose of shares by sale, gift and so on; (5) monitor the business through the balance sheet and records; (6) sue board members for their errors; (7) priority in subscription when new shares are issued; (8) recoup their share from what is left on liquidation.
Stay → Vote → Earn → Sell → Watch → Sue → Buy first → Collect at the end.
6. Give the rules for trading shares and explain how zakat is paid on them.
Show model answer
Trading rules: buying shares with an interest-bearing loan is strictly prohibited; short selling — selling a share you do not yet own — is forbidden; shares are fully negotiable and may be sold, transferred or used as collateral for a mortgage; and paying for a share in installments is permissible.
Zakat: a long-term investor who holds for periodic dividends owes no zakat directly, provided the company pays zakat on its shareholders' behalf, as companies in Saudi Arabia do. An active trader values the whole portfolio at market value at the end of the lunar year and pays zakat on that value.