Which of the following statements holds true for "mudarabah," an investment partnership approved by the Sharia?
A)It refers to a partnership in which one partner takes part in financial practices like charging interest on money, speculation, insurance, and derivatives.
B)It refers to a partnership that allows a special partner whose name does not appear in that of the firm, to invest a limited amount of capital and to receive a corresponding share of the profits and to bear any corresponding losses.
C)It refers to a partnership in which the profits are shared on an agreed-upon ratio but the loss of investment is borne only by the investor.
D)It refers to a partnership whereby the individuals agree to share the profits and losses together without fixing any limitations or conditions.
E)It refers to a partnership wherein profits are shared according to an agreed-upon ratio and losses are shared in proportion to the capital or investment of each partner.

Question

Quizplus · Accepted Answer

Mudarabah is a form of investment partnership under Islamic finance where the profits are shared according to a pre-agreed ratio, while losses are borne solely by the provider of the capital, aligning with the principles of risk and reward in Islamic finance.

Which of the Following Statements Holds True for "Mudarabah," an Investment