Islam Prohibits the Payment or Receipt of Interest,which Is Considered

question 54

Essay

Islam prohibits the payment or receipt of interest,which is considered usury.Then how do Islamic banks make money?

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Definitions:

Levered Firms

Companies that have incurred debt. Leveraging amplifies both the potential returns and risks of investments.

Unlevered Firms

Businesses that function without incorporating debt or borrowed funds into their financing strategies.

Financial Risk

The possibility of losing money on investments or business operations due to financial market volatility, interest rate changes, or poor financial management.

Financial Policy

Financial policy refers to the strategies that a company employs to manage its finances, including decisions on investments, capital structure, dividends, and working capital management.