Which of the following is a difference between Musharaka and Mudaraba?

Profit-sharing ratio only
Management role of entrepreneur
Management role of capital provider
Loss-sharing ratio only

Solutions

Expert Solution

Answer is c ) Management role of capital provider

In Musharaka all partner contribute capital and all partner can activate participate in business management while in mudaraba capital is provided by investors and management is done by manager investor can't directly participate in management.

Option a) Profit sharing ratio

In Musharaka profit shared in agreed ratio between partner and in mudaraba profit shared between investor and manager in agreed ratio . So there is no huge difference further

Option b) management role of entrepreneurs

In Musharaka partner are entrepreneur and they look for management too where as in mudaraba manager is entrepreneur and and manager looks for management

So in both case manager ans entrepreneur is same so there is no difference.

Option d) loss sharing ratio only

In Musharaka loss is share between partner (investor) and in mudaraba loss is shard by investors i.e. provider of capital.

So there is no huge difference.

jeff jeffy answered 2 years ago

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