ACCA Financial Management (F9) Certification Practice Exam

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Prepare for the ACCA Financial Management (F9) Certification Exam with engaging quizzes and interactive content. Dive deep into financial management concepts and boost your exam confidence with questions that come with detailed explanations.

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Which term in Islamic finance refers to a partnership where one party offers capital and the other offers expertise?

Mudaraba
Murabaha
Ijara
Musharaka

The correct answer is: Mudaraba

The term that refers to a partnership in Islamic finance where one party provides capital and the other contributes expertise is known as Mudaraba. In this arrangement, the capital provider (the Rabb al-Mal) invests money into a project while the entrepreneur (the Mudarib) manages the investment. This partnership allows the expertise of one partner to complement the financial resources of the other, aligning with the principles of risk-sharing and ethical investment in Islamic finance. In Mudaraba, profits generated from the venture are shared based on a pre-agreed percentage, but the loss is borne solely by the capital provider. This arrangement promotes entrepreneurship while adhering to Islamic principles by avoiding interest (riba) and ensuring that both parties have aligned interests in the success of the investment. The model encourages collaboration and supports the dynamics of risk and reward in a business venture, making it a fundamental concept in Islamic financial practices.