ACCA FM · Chapter 10 · Question 5 of 11
Which Islamic finance instrument is the equivalent of a lease, where the financier retains ownership of the asset and receives rental payments?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Ijara
Explanation
Under Ijara the financial institution buys the asset and leases it to the customer for a rental. Ownership, and the risks of ownership, remain with the financier, which is why the rental return is acceptable under Sharia principles. It can be structured as the equivalent of either an operating or a finance lease.
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