Musharakah is a relationship between two parties or more, of whom contribute capital to a business, and divide the net profit and loss pro rata.
This is often used in investment projects, letters of credit, and the purchase or real estate or property. In the case of real estate or property, the bank assess an imputed rent and will share it as agreed in advance.
All providers of capital are entitled to participate in management, but not necessarily required to do so.
The profit is distributed among the partners in pre-agreed ratios, while the loss is borne by each partner strictly in proportion to respective capital contributions.
This concept is distinct from fixed-income investing (i.e. issuance of loans).
This is often used in investment projects, letters of credit, and the purchase or real estate or property. In the case of real estate or property, the bank assess an imputed rent and will share it as agreed in advance.
All providers of capital are entitled to participate in management, but not necessarily required to do so.
The profit is distributed among the partners in pre-agreed ratios, while the loss is borne by each partner strictly in proportion to respective capital contributions.
This concept is distinct from fixed-income investing (i.e. issuance of loans).
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