Economics · Economy
A manufacturing company, Xerses Co, requires short-term funding to purchase raw materials and is evaluating Murabaha for its short-term needs and Sukuk for its long-term factory funding. Which of the following correctly identifies a structural characteristic of these instruments?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Unlike conventional debt, Murabaha profit margins are agreed upfront and cannot be increased if the customer defaults or is late with a payment.✓
- 2Sukuk are essentially identical to conventional unsecured bonds because they represent a debt obligation of the issuer to pay a fixed return to investors.
- 3In a Murabaha transaction, the bank acts as an agent and never takes legal title to the assets, ensuring the transaction remains a pure loan of money.
- 4Sukuk holders are prohibited from selling their certificates on a secondary market because Sharia law forbids any form of trading in financial instruments.
Correct answer
Unlike conventional debt, Murabaha profit margins are agreed upfront and cannot be increased if the customer defaults or is late with a payment.
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