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Asset Allocation with Swaps

Swaps can be used to allocate assets within a fund/ portfolio while maintaining its actual composition of equity or fixed...

Difference Between Conventional Leasing and Islamic Leasing (Ijarah)

A conventional lease is a commutative contract between a lessor and lessee whereby an asset (property) is placed at the...

Marking a Swap to Market

A swap can be marked to market when its settlement takes place by periodically readjusting its payments to market rates....

Differences Between Mudaraba and Musharaka

Mudaraba is a partnership in profit in which one partner provides capital (rab al-mal) and the other provides labor and...

Differences Between Profit Equalization Reserve and Investment Risk Reserve

The profit equalization reserve (PER) is the amount appropriated by an Islamic bank or financial institution out of the mudaraba...

Difference Between Sukuk and Bonds

Sukuk are financial instruments and certificates of equal value representing undivided shares in ownership of tangible assets/ projects/ usufructs/ services/...

Difference Between Zakah and Tax

Zakah (زكاة) is Arabic for obligatory charity (the third pillar of Islam). It constitutes a portion of wealth prescribed by...

Accounting Treatment for Purchase Undertaking in Sukuk

Purchase undertaking in sukuk is an undertaking (binding promise- wa'ad mulzim) by either the issuer of sukuk or the manager...

Closing Out a Currency Swap

A currency swap entails the exchange of two series of payments and two notional principal amounts each denominated in a...

Closing out a Forward Contract

A forward contract is the simplest type of derivatives, as it constitutes a future-delivery sale transacted today. Once the contract...