Derivatives

Equity Index Derivative

May 15, 2023
Islamic Finance

Rokhsah

May 15, 2023

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It is a form of musharaka in which the Islamic bank or financial institution owns shares or units representing an equity stake in another firm’s capital. As such, this arrangement represents an implicit or indirect way of partnership since the Islamic bank has become a partner by contributing capital to an existing venture against owning a specific amount of shares therein.

It is known in Arabic as musahamat (مساهمات).

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