INTRODUCTION TO ENTREPRENEURSHIP
CHARACTERISTICS OF AN ENTREPRENEUR
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Mudharabah
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Musyarakah
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Either A or B
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None of the above
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Detailed explanation-1: -Mudharabah is a contract where the capital provider (known as rabbul mal), provides capital to the entrepreneur (known as mudarib) who contributes his or her skills in a business. Under this arrangement, the capital provider and the entrepreneur share the profits generated from the business.
Detailed explanation-2: -MURABAHA. The Murabaha is a form of cost plus financing where a Financier will purchase an asset and sell it on to a Company for an amount made up of the cost of the asset plus a profit margin for doing the transaction.
Detailed explanation-3: -The Mudarabah contract is a contract that prioritizes the trust of the property/capital owner (shabibul māl) and the property manager’s mandate (capital manager). The proportionate share in profit is determined by mutual agreement.
Detailed explanation-4: -Mudaraba (finance trusteeship) and Musharaka (equity partnership) are two such financial instruments based on the profit-and-loss sharing system, where instead of lending money to an entrepreneur at a fixed rate of return, the financier shares in the ventures profits and losses (The Economist 2001).