ACCA FM · Chapter 10 · Question 4 of 11
In Islamic finance, which arrangement involves a financial institution buying an asset and selling it to the customer at an agreed mark-up, with payment deferred?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Murabaha
Explanation
Murabaha is a form of trade credit: the bank purchases the goods and resells them to the customer at cost plus an agreed mark-up, payable later in instalments or a lump sum. The mark-up is fixed in advance and is not interest because it relates to the sale of an asset. Ijara is leasing, while Mudaraba and Musharaka are profit-sharing partnerships.
More Sources of finance, Islamic finance and dividend policy MCQs
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