PRC-3 · Chapter 4 · Question 36 of 65
Under Islamic banking principles, a partnership is formed where one party provides the capital and the other provides management expertise, and they share profits according to a pre-agreed ratio. What is this arrangement called?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Mudarabah
Explanation
Mudarabah is an Islamic finance concept where a financier provides capital and an entrepreneur provides labor, sharing profits but only the financier bears financial loss.
More Sources of Business Finance MCQs
- Q38A logistics firm uses a 3-month overdraft to purchase a fleet of heavy trucks that will take 8 years to generate enough revenue to pay for…
- Q39A textile wholesaler severely lacks short-term funds to pay its factory workers, but it holds a large number of unpaid customer invoices…
- Q40A manufacturer has Rs. 5 million in outstanding customer invoices but needs cash today to pay suppliers. A bank agrees to buy these…
- Q41A logistics company acquires a fleet of trucks under an agreement where it pays monthly installments for 5 years. At the end of the 5…
- Q42Instead of buying a heavy crane, a construction firm rents it for 6 months for a specific project and returns it to the owner afterward…