Islamic Finance

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FortuitousSeal1908
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5 Questions

Which type of partnership allows partners to benefit from the appreciation in the value of assets, even if profit has not been made through sales?

Musharakah

In musharakah, how are the assets of the partnership owned?

Jointly owned by all partners

In mudarabah, who solely owns the goods purchased?

Rabb-ul-mal

How can the mudarib earn their share of profit in mudarabah?

By selling the goods profitably

Can the mudarib claim their share in the assets themselves in mudarabah?

No

Study Notes

Partnership Types

  • A partnership that allows partners to benefit from the appreciation in the value of assets, even if profit has not been made through sales, is a type of musharakah partnership.

Ownership in Musharakah

  • In musharakah, assets of the partnership are owned jointly by all partners.

Ownership in Mudarabah

  • In mudarabah, the owner of the capital (rabb-ul-mal) solely owns the goods purchased.

Earning Profit in Mudarabah

  • The mudarib (manager) earns their share of profit in mudarabah by managing the goods or business and generating profit.

Mudarib's Share in Mudarabah

  • The mudarib cannot claim their share in the assets themselves in mudarabah; they only earn a share of the profit generated.

Test your knowledge on the differences between musharakah and mudarabah in Islamic finance. Learn about how assets are owned, distributed profits, and more in this informative quiz.

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