Religious Criteria

Lesson

Religious criteria are nonfinancial investment considerations that may influence a client's investment decisions based on religious beliefs and values.

Practice Question #1

Which of the following investment approaches is specifically based on Islamic principles?

A) Socially responsible investing

B) Halal investing

C) Environmental, social, and governance criteria

D) Impact investing

Select an option above to see an explanation here.

A) Socially responsible investing considers financial returns and social/environmental impact but is not exclusively faith-based. B) Halal investing adheres to Islamic principles, avoiding investments in industries such as alcohol, gambling, and pork production. C) Environmental, social, and governance criteria evaluate investments' sustainability and ethical impact but are not exclusively faith-based. D) Impact investing seeks to generate positive social and environmental impact alongside financial returns but is not solely based on religious beliefs.

Terms

Religious criteria:: Nonfinancial investment considerations based on a client's religious beliefs and values.
Halal investing:: An investment approach that adheres to Islamic principles, avoiding investments in industries such as alcohol, gambling, and pork production.
Shariah-compliant investing:: An investment approach that follows Islamic law, including principles such as risk-sharing and the prohibition of interest.
Catholic values investing:: An investment approach that follows the social teachings of the Catholic Church, emphasizing human dignity, social justice, and environmental stewardship.

Practice Question #2

What is the primary purpose of incorporating religious criteria into a client's investment profile?

A) To maximize financial returns

B) To ensure compliance with regulatory requirements

C) To align investment recommendations with the client's religious beliefs and values

D) To minimize investment risk

Select an option above to see an explanation here.

A) Maximizing financial returns is a goal of investing but may not be the primary purpose of incorporating religious criteria. B) Ensuring compliance with regulatory requirements is important but not the primary purpose of incorporating religious criteria. C) Aligning investment recommendations with the client's religious beliefs and values is the primary purpose of incorporating religious criteria. D) Minimizing investment risk is a goal of investing but may not be the primary purpose of incorporating religious criteria.

Do Not Confuse With

Environmental, social, and governance (ESG) criteria:: Factors used to evaluate the sustainability and ethical impact of investments, which may overlap with religious criteria but are not exclusively faith-based.

Practice Question #3

Which of the following investment approaches is most closely associated with Christian values?

A) Biblically responsible investing

B) Shariah-compliant investing

C) Environmental, social, and governance criteria

D) Impact investing

Select an option above to see an explanation here.

A) Biblically responsible investing aligns with Christian values, avoiding investments in industries such as abortion, pornography, and gambling. B) Shariah-compliant investing follows Islamic law and is not specifically associated with Christian values. C) Environmental, social, and governance criteria evaluate investments' sustainability and ethical impact but are not exclusively faith-based. D) Impact investing seeks to generate positive social and environmental impact alongside financial returns but is not solely based on religious beliefs.

Historical Example

In the 18th century, the Quakers and Methodists in the United States and the United Kingdom began to avoid investments in industries such as slavery and weapons manufacturing due to their religious beliefs. This early faith-based investing laid the foundation for modern religious investment strategies.